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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="4"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</B>
</FONT>

<DIV align="center"><FONT size="3"><B>Washington, D.C. 20549</B>
</FONT></DIV>
<P align="center"><FONT size="5"><B>FORM 20-F</B>
</FONT>

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<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
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    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96%">&nbsp;</TD>
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<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="3"><FONT face="wingdings">o</FONT></FONT></TD>
    <TD><FONT size="3">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="3">
<B>REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g)</B></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="3">&nbsp;</FONT></TD>
    <TD><FONT size="3">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="3">
<B>OF THE SECURITIES EXCHANGE ACT OF 1934</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
<B>OR</B></FONT></TD>
<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="3"><FONT face="wingdings">x</FONT></FONT></TD>
    <TD><FONT size="3">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="3">
<B>ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)</B></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="3">&nbsp;</FONT></TD>
    <TD><FONT size="3">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="3">
<B>OF THE SECURITIES EXCHANGE ACT OF 1934</B></FONT></TD>
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<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
<B>For the fiscal year ended December&nbsp;31, 2002</B></FONT></TD>
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    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
<B>OR</B></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="3"><FONT face="wingdings">o</FONT></FONT></TD>
    <TD><FONT size="3">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="3">
<B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)</B></FONT></TD>
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<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="3">&nbsp;</FONT></TD>
    <TD><FONT size="3">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="3">
<B>OF THE SECURITIES EXCHANGE ACT OF 1934</B></FONT></TD>
</TR>
</TABLE>
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<P align="center"><FONT size="2">Commission file number: 1-14894
</FONT>

<P align="center"><FONT size="6">BRASKEM S.A.
</FONT>

<DIV align="center"><FONT size="2">(Exact Name of Registrant as Specified in its Charter)
</FONT></DIV>
<P align="center"><FONT size="2">N/A<BR>
<HR align="center" size="1" width="23%" noshade>
</FONT>

<DIV align="center"><FONT size="2">(Translation of Registrant&#146;s name into English)
</FONT></DIV>
<P align="center"><FONT size="2">Federative Republic of Brazil<BR>
<HR align="center" size="1" width="23%" noshade>
</FONT>

<DIV align="center"><FONT size="2">(Jurisdiction of Incorporation or Organization)
</FONT></DIV>
<P align="center"><FONT size="2">Av. das Na&#231;&#245;es Unidas, 4777<BR>
S&#227;o Paulo, SP - CEP 05477-000 Brazil<BR>
<HR align="center" size="1" width="33%" noshade>
</FONT>

<DIV align="center"><FONT size="2">(Address of principal executive offices)
</FONT></DIV>
<P align="center"><FONT size="2">Securities registered pursuant to Section&nbsp;12(b) of the Exchange Act:
</FONT>

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    <TD width="25%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
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<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Title of Each Class</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Name of Each Exchange in which Registered</B></FONT></TD>
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<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
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<TR valign="bottom">
    <TD valign="top" nowrap><FONT size="2">Preferred Shares, Class&nbsp;A, no par value</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
New York Stock Exchange*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top" nowrap><FONT size="2">American Depositary Shares (&#147;ADSs&#148;),</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top" nowrap><FONT size="2">&nbsp;&nbsp;&nbsp;each representing 50 Preferred
Shares, Class&nbsp;A</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
New York Stock Exchange</FONT></TD>
</TR>
</TABLE>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">*</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Not for trading, but only in connection with the
registration of American Depositary Shares, pursuant to the
requirements of the United States Securities and Exchange
Commission.</FONT></TD>
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</TABLE>
<P align="center"><FONT size="2">Securities registered pursuant to Section&nbsp;12(g) of the Act:<BR>
<HR align="center" size="1" width="45%" noshade>
</FONT>

<P align="center"><FONT size="2">None
</FONT>

<P align="center"><FONT size="2">Securities for which there is a reporting obligation<BR>
pursuant to Section&nbsp;15(d) of the Act:<BR>
<HR align="center" size="1" width="37%" noshade>
</FONT>

<P align="center"><FONT size="2">None
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The total number of issued shares of each class of stock of BRASKEM S.A.
as of December&nbsp;31, 2002 was:
</FONT>
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<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
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<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="right"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1,226,091,148</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">Common Shares, no par value per share</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD colspan="2" align="right"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2,160,764,336</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">Preferred Shares, Class A, no par value per share</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="right"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">11,457,740</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">Preferred Shares, Class B, no par value per share</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark whether the Registrant (1)&nbsp;has filed all reports
required to be filed by Section&nbsp;13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12&nbsp;months (or such shorter period that the Registrant
was required to file such reports), and (2)&nbsp;has been subject to such filing
requirements for the past 90&nbsp;days. Yes <FONT face="wingdings">x</FONT> No <FONT face="wingdings">o</FONT>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark which financial statement item the Registrant has
elected to follow Item&nbsp;17 <FONT face="wingdings">o</FONT> Item&nbsp;18 <FONT face="wingdings">x</FONT><B>.</B>
</FONT>
<P align="center"><FONT size="2">&nbsp;</FONT>
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<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
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<TR><TD colspan="9"><A HREF="#000"> PART I</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#001"> ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISER</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#002"> ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#003"> ITEM 3. KEY INFORMATION</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#004">ITEM 4. INFORMATION ON THE COMPANY</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#005">ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#006">ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#007">ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#008">ITEM 8. FINANCIAL INFORMATION</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#009">ITEM 9. THE OFFER AND LISTING</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#010">ITEM 10. ADDITIONAL INFORMATION</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#011">ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#012">ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#013">PART II</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#014">ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#015">ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#016">ITEM 15. CONTROLS AND PROCEDURES</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#017">ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#018">ITEM 16B. CODE OF ETHICS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#019">PART III</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#020">ITEM 17. FINANCIAL STATEMENTS</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#021">ITEM 18. FINANCIAL STATEMENTS</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#022">ITEM 19. EXHIBITS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#023">SIGNATURES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#024">INDEPENDENT AUDITORS&#146; REPORT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y88049exv1w01.txt">BYLAWS</A></TD></TR>
<TR><TD colspan="9"><A HREF="y88049exv2w01.txt">DEPOSIT AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y88049exv3w01.txt">SHAREHOLDER AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y88049exv3w02.txt">FIRST AMENDMENT TO SHAREHOLDER AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y88049exv3w03.txt">MEMO OF UNDERSTANDING REGARDING SHAREHOLDER AGR.</A></TD></TR>
<TR><TD colspan="9"><A HREF="y88049exv3w04.txt">FIRST AMENDMENT TO MEMO</A></TD></TR>
<TR><TD colspan="9"><A HREF="y88049exv3w05.txt">MEMO OF UNDERSTANDING REGARDING SHAREHOLDER AGR.</A></TD></TR>
<TR><TD colspan="9"><A HREF="y88049exv4w03.txt">2ND AMENDMENT TO SALE CONTRACT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y88049exv4w04.txt">PROTOCOL AND JUSTIFICATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="y88049exv4w05.txt">PROTOCOL AND JUSTIFICATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="y88049exv4w06.txt">PROTOCOL AND JUSTIFICATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="y88049exv6w01.txt">STATEMENT RE: COMPUTATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="y88049exv8w01.txt">LIST OF SUBSIDIARIES</A></TD></TR>
<TR><TD colspan="9"><A HREF="y88049exv10w01.txt">CERTIFICATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="y88049exv10w02.txt">CERTIFICATION</A></TD></TR>
</TABLE>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2">TABLE OF CONTENTS
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="95%">
<TR valign="bottom">
    <TD width="94%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
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<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PART I</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 1. Identity of Directors, Senior Management and Adviser</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 2. Offer Statistics and Expected Timetable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 3. Key Information</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 4. Information on the Company</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 5. Operating and Financial Review and Prospects</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">61</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 6. Directors, Senior Management and Employees</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 7. Major Shareholders and Related Party Transactions</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">106</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 8. Financial Information</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">114</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 9. The Offer and Listing</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">121</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 10. &nbsp;&nbsp;Additional Information</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">125</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 11. &nbsp;&nbsp;Quantitative and Qualitative Disclosures About Market Risk</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">144</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 12. &nbsp;&nbsp;Description of Securities Other than Equity Securities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">148</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PART II</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 13. &nbsp;&nbsp;Defaults, Dividend Arrearages and Delinquencies</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">149</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 14. &nbsp;&nbsp;Material Modifications to the Rights of Security Holders and Use of Proceeds</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">149</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 15. &nbsp;&nbsp;Controls and Procedures</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">149</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 16A.Audit Committee Financial Expert</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 16B.Code of Ethics</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PART III</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 17. &nbsp;&nbsp;Financial Statements</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">151</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 18. &nbsp;&nbsp;Financial Statements</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">151</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 19. &nbsp;&nbsp;Exhibits</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">151</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">&nbsp;</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2"><B>GLOSSARY OF CERTAIN PETROCHEMICAL TERMS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Acrylonitrile</I>&#148; is an intermediate chemical product used in the production
of acrylic fibers, nitrylic rubber, ABS and SAN resins and acrylic paint.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Aromatics</I>&#148; is a major group of organic chemical compounds, which are
hydrocarbons containing one or more benzene rings, typified by benzene, derived
chiefly from petroleum and coal tar, and used to make a broad range of
downstream chemical products.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Basic petrochemicals</I>&#148; are the petrochemicals produced by crackers or
first generation producers, such as ethylene, propylene, butadiene, benzene,
toluene, xylene and other chemicals.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Benzene</I>&#148; is an aromatic used to make phenol, chlorobenzene, styrene and
other chemicals.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Butadiene</I>&#148; is a basic organic chemical used to make polybutadiene,
styrene-butadiene and neoprene rubbers, chlorobenzene and other chemicals.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Capacity</I>&#148; means the annual output capacity of a given facility or, where
appropriate, the annual throughput capacity, calculated by estimating the
number of days in a year that such facility is expected to operate, deducting
downtime for regular maintenance, and multiplying that number by an amount
equal to the facility&#146;s optimal daily output or throughput, as the case may be.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Caprolactam</I>&#148; or &#147;<I>CPL</I>&#148; is an intermediate chemical product used in the
production of nylon 6.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Crackers</I>&#148; are Brazil&#146;s three first generation producers that transform or
&#147;crack&#148; naphtha and gas oil into basic petrochemicals, such as ethylene and
propylene.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Debottlenecking</I>&#148; is the making of technical and operational improvements
in order to maximize the output and performance of a facility within the
existing limits of such facility.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>DMT</I>&#148; means dimethyl terephthalate and is an intermediate chemical product
used in the production of fibers or polyester resins.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>EDC</I>&#148; is an intermediate chemical product used in the production of PVC.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Ethylene</I>&#148; is a basic organic chemical, mainly derived from thermal
cracking of feedstocks such as ethane, naphtha and gas oil, and is used to make
polyethylene and many other organic chemical intermediates, such as ethylene
dichloride, VCM, ethylene oxide and styrene.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Feedstocks</I>&#148; are the major raw materials of a petrochemical plant.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>First generation producer</I>&#148; is a petrochemical cracker.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>First generation petrochemicals</I>&#148; are Basic Petrochemicals. See
definition of &#147;Basic Petrochemicals&#148; above.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Gasoil&#148; or &#147;Gas oil</I>&#148; is an intermediate distillate product used as diesel
fuel, heating fuel and, sometimes, as feedstock.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>HDPE</I>&#148; means high density polyethylene.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Isoprene</I>&#148; is a hydrocarbon compound with two unsaturated bounds and is
mainly used as a starting material for the manufacture of SIS.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>LDPE</I>&#148; means low density polyethylene.
</FONT>
<P align="center"><FONT size="2">(ii)
</FONT>

<P align="center"><FONT size="2">&nbsp;</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>LLDPE</I>&#148; means linear low density polyethylene.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>LPG</I>&#148; means liquified petroleum gas.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>MTBE</I>&#148; means methyl tertiary butyl ether and is an additive used to
improve gasoline performance.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Naphtha</I>&#148; is a by-product of crude oil refining which is used by the
crackers as a feedstock.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Olefin</I>&#148; is a hydrocarbon such as ethylene or propylene, without benzene
rings and with a double bond connection between two carbon atoms.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Ortho-xylene</I>&#148; is a feedstock used in the production of fibers and
polyester resins.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Oxidation</I>&#148; is a chemical reaction in which a substance is combined with
oxygen.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Para-xylene</I>&#148; is a feedstock used in the production of fibers and
polyester resins.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Polybutadiene</I>&#148; is a polymer derived from the polymerization of butadiene
and is used to make synthetic rubber.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Polyethylene&#148; </I>is a polymer derived from polymerization of ethylene and is
used to make various plastics, including film and sheet, piping and containers.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Polymer</I>&#148; is a chemical compound or mixture of compounds formed by
polymerization and consisting essentially of repeating structural units
(monomers).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Polymerization</I>&#148; is a chemical reaction in which two or more molecules
combine to form larger molecules that contain repeating structural units
(monomers).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Polypropylene (PP)</I>&#148; is a polymer derived from the polymerization of
propylene and is used to make various plastics such as film and sheet, piping
and containers.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Polystyrene&#148; or &#147;(PS)</I>&#148; is a thermoplastic resin used mainly to produce
disposable containers.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Propylene</I>&#148; is a basic organic chemical, mainly derived from thermal
cracking of naphtha or from catalytic cracking of crude oil in refineries, used
to make polypropylene and many organic chemical intermediaries such as
propylene oxide, cumene and alcohols.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>PVC</I>&#148; means polyvinylchloride, a polymer derived from the polymerization
of VCM, and used to make various plastics for use in film, sheet, piping,
containers and other products.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Resin</I>&#148; is a synthetic polymer such as polyethylene, polypropylene or PVC
made from a chemical reaction. The synthetic resin is the polymer itself, while
the &#147;plastic&#148; is the polymer plus additives such as colorants or plasticizer.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Second generation producer</I>&#148; is a producer of intermediate petrochemical
products.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Second generation petrochemicals</I>&#148; are the intermediate products generated
by the second generation producers, such as resins and fibers.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Third generation producer</I>&#148; is a producer that transforms resins and other
intermediate products into end products.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Toluene</I>&#148; is a liquid aromatic hydrocarbon.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>VCM</I>&#148; means vinylchloride monomer.
</FONT>
<P align="center"><FONT size="2">(iii)
</FONT>

<P align="center"><FONT size="2">&nbsp;</FONT>
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<P align="center"><FONT size="2"><B>INTRODUCTION</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All references herein (1)&nbsp;to &#147;Braskem&#148; or the &#147;Company&#148; are references to
Braskem S.A. and its consolidated subsidiaries, except where the context
indicates that such references are solely to Braskem S.A. and (2)&nbsp;to the
&#147;Brazilian Government&#148; are references to the federal government of the
Federative Republic of Brazil.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;References to &#147;<I>real</I>,&#148; &#147;<I>reais</I>&#148; or &#147;R$&#148; are to Brazilian <I>reais </I>(plural)&nbsp;and
to the Brazilian <I>real </I>(singular), the official currency of Brazil; and
references to &#147;U.S. dollars,&#148; &#147;dollars&#148; or &#147;U.S.$&#148; are to United States
dollars.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless otherwise specified, metric units have been used, <I>e.g.</I>, tons refer
to metric tons.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Some of the figures included in this annual report have been rounded.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has prepared its consolidated financial statements as of
December&nbsp;31, 2002 and 2001 and for the three years ended December&nbsp;31, 2002
included herein (the &#147;Consolidated Financial Statements&#148;) in conformity with
generally accepted accounting principles in the United States (&#147;U.S. GAAP&#148;).
</FONT>

<hr width="20%" noshade size="1">
<P align="center"><FONT size="2"><B>CAUTIONARY STATEMENT WITH RESPECT TO FORWARD-LOOKING STATEMENTS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Annual Report contains forward-looking statements. Some of the
matters discussed concerning the Company&#146;s business operations and financial
performance include forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended (the &#147;Securities Act&#148;) and
Section&nbsp;21E of the Securities Exchange Act of 1934, as amended (the &#147;Exchange
Act&#148;).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Statements that are predictive in nature, that depend upon or refer to
future events or conditions or that include words such as &#147;expects,&#148;
&#147;anticipates,&#148; &#147;intends,&#148; &#147;plans,&#148; &#147;believes,&#148; &#147;estimates&#148; and similar
expressions are forward-looking statements. Although the Company believes that
these forward-looking statements are based upon reasonable assumptions,
including projections of net sales, operating margins, earnings, cash flows,
research and development costs, working capital, capital expenditures and other
projections, these statements are subject to several risks and uncertainties
and are made in light of information currently available to the Company.
Accordingly, the Company cannot assure holders of its American Depository
Shares (&#147;ADSs&#148;) that these statements will be achieved.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s forward-looking statements will also be influenced by
factors such as:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">general economic, political and business conditions in its markets,
both in Brazil and abroad, including the level of spending;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">interest rate fluctuations, inflation and devaluation of the <I>real </I>in relation to the U.S. dollar;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the outcome of pending litigation;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">competition;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">its ability to obtain financing;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">approval by Brazilian antitrust authorities of the corporate restructuring involving the Company; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">other factors discussed under &#147;Item&nbsp;3. Key Information&#151;Risk Factors.&#148;</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of ADSs are cautioned that the Company&#146;s forward-looking
statements are not guarantees of future performance, and the actual results or
developments may differ materially from the expectations expressed in the
forward-looking statements.
</FONT>
<P align="center"><FONT size="2">(iv)
</FONT>

<P align="center"><FONT size="2">&nbsp;</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As for the forward-looking statements that relate to future financial
results and other projections, actual results will be different due to the
inherent uncertainty of estimates, forecasts and projections and may be better
or worse than projected. Because of these uncertainties, holders of ADSs
should not place any reliance on these forward-looking statements. These
forward-looking statements also represent the Company&#146;s estimates and
assumptions only as of the date that they were made. The Company expressly
disclaims a duty to provide updates to these forward-looking statements, and
the estimates and assumptions associated with them, after the date of this
annual report to reflect events or changes in circumstances or changes in
expectations or the occurrence of anticipated events.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company undertakes no obligation to publicly update any
forward-looking statement, whether as a result of new information, future
events or otherwise. Holders of ADSs are advised, however, to consult any
additional disclosures the Company makes in its Form&nbsp;6-K reports to the SEC.
Holders of ADSs should also note that the Company provides cautionary
discussions of risk and uncertainties under the caption &#147;Risk Factors&#148; in Item
3 of this Annual Report. These are factors that the Company believes could
cause its actual results to differ materially from expected results.
Additional factors besides those listed in Item&nbsp;3 could adversely affect the
Company.
</FONT>
<P align="center"><FONT size="2">(v)</FONT>
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<!-- link1 " PART I" -->
<DIV align="left"><A NAME="000"></A></DIV>

<P align="center"><FONT size="2"><B>PART I</B>
</FONT>

<!-- link2 " ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISER" -->
<DIV align="left"><A NAME="001"></A></DIV>
<P align="left"><FONT size="2"><B>ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISER</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</FONT>
<!-- link2 " ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE" -->
<DIV align="left"><A NAME="002"></A></DIV>
<P align="left"><FONT size="2"><B>ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</FONT>
<!-- link2 " ITEM 3. KEY INFORMATION" -->
<DIV align="left"><A NAME="003"></A></DIV>
<P align="left"><FONT size="2"><B>ITEM 3. KEY INFORMATION</B>
</FONT>

<P align="left"><FONT size="2"><B>Selected Financial Data</B></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table presents selected financial information for the
Company at the dates and for each of the years indicated. The selected
financial information set forth below has been derived from financial
statements of the Company prepared in accordance with U.S. GAAP. The selected
financial data as of December&nbsp;31, 2002 and 2001 and for each of the three years
ended December&nbsp;31, 2002 have been derived from, and should be read in
conjunction with, the Consolidated Financial Statements included in this Annual
Report. The selected financial data as of December&nbsp;31, 2000, 1999 and 1998 and
for each of the two years in the period ended December&nbsp;31, 1999 have been
derived from audited financial statements of the Company that are not included
elsewhere in this Annual Report. This information should be read in
conjunction with &#147;Item&nbsp;5. Operating and Financial Review and Prospects&#148; and is
qualified in its entirety by reference to the Consolidated Financial Statements
and the notes thereto appearing elsewhere herein.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="36%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>As at and for the year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="19"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1999</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1998</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>(in millions of U.S. dollars, except</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>per thousand shares and per ADS amounts)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Statements of operations data</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">2,391.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">1,771.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">1,555.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">1,011.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">1,039.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cost of sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,901.0</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,447.2</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,252.4</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(719.0</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(804.1</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gross profit</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">490.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">324.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">302.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">292.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">234.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">522.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">244.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">225.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">236.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">174.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Financial income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">167.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">80.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">94.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">102.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">87.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Financial expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,159.8</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(294.6</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(134.0</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(220.2</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(173.0</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other non-operating income (expenses)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(57.3</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(26.3</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2.5</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(9.7</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.1</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income (loss)&nbsp;before income tax, equity in
earnings of affiliates, minority interest, change
in accounting principle and income from
discontinued operations</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(527.1</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">184.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">108.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">88.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income tax (expense)&nbsp;benefit
</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">
Current</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(25.5</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.9</FONT></TD>
    <TD nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.3</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1.3</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.8</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Deferred</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.5</FONT></TD>
    <TD nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2.6</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(3.1</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Equity in earnings of affiliates, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6.1</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1.5</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Minority interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">65.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(63.8</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1.0</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.7</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income (loss)&nbsp;before change in accounting
principle and income loss from discontinued
operations</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(460.0</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(52.0</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">188.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">103.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">101.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cumulative effect of change in accounting principle</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income (loss)&nbsp;from discontinued operations(1)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.2</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">1</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="36%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>As at and for the year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="19"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1999</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1998</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>(in millions of U.S. dollars, except</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>per thousand shares and per ADS amounts)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net income (loss)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">(460.0</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">(50.2</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">188.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">118.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">100.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income applicable to:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Preferred Class&nbsp;A shares</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">119.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">75.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">64.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Preferred Class&nbsp;B shares</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Common shares</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(460.0</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(50.2</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">68.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">43.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">36.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Basic and diluted earnings (losses)&nbsp;per thousand
shares:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Preferred Class&nbsp;A shares</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">106.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">66.57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">56.42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Preferred Class&nbsp;B shares</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">21.12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22.53</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">33.34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Common shares</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.38</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.06</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">106.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">66.57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">56.42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Earnings (losses)&nbsp;per ADS (2)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.33</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.82</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Balance sheet data</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash and cash equivalents</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">35.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">109.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">18.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">70.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">42.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Property, plant and equipment, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,183.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,758.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">989.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,072.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,615.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,935.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,703.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,915.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,998.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,584.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Current portion of long-term debt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">413.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">578.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">177.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">170.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">225.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Long-term debt, net of current portion</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,058.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,216.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">439.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">521.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">635.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Shareholders&#146;
equity (deficit)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(362.4</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">195.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,171.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,160.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,555.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Other financial information</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net cash provided by (used in):</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">429.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">124.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">166.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">225.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">227.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Investing activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(217.2</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(118.5</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(65.9</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(137.8</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(39.6</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Financing activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(191.1</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">91.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(149.8</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(55.1</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(220.6</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Capital expenditures</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(115.5</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(146.3</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(58.4</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(24</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(66</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(1)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Income from discontinued operations includes equity in discontinued
operations and result from sale of assets.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(2)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Earnings per ADS have been calculated on the basis that each ADS
represents 50 preferred class A shares. Earnings per ADS is calculated by
reference to the income available to preferred class A shares and the
weighted average number of preferred class A shares outstanding during
each period.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><B>Exchange Rates</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are two principal legal foreign exchange markets in Brazil:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the commercial rate exchange market; and
</FONT></TD>
</TR>
<TR><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the floating rate exchange market.</FONT></TD>
</TR>


</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On January&nbsp;25, 1999, the Brazilian government announced the unification of
the operational limits applicable to both markets. However, each market
continues to have a specific regulation. Most trade and financial
foreign-exchange transactions are carried out on the commercial rate exchange
market. Foreign currencies may only be purchased through a Brazilian bank
authorized to operate in these markets. In both markets, rates are freely
negotiated but may be strongly influenced by the intervention of the Central
Bank of Brazil (the &#147;Central Bank&#148;).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From March 1995 through January 1999, the <I>real </I>gradually devalued against
the U.S. dollar. In January 1999, the Central Bank abolished the band system
and allowed the <I>real</I>/U.S. dollar exchange rate to float freely. Since then,
the <I>real</I>/U.S. dollar exchange rate has been established mainly by the interbank
market and has fluctuated considerably. From December&nbsp;31, 1998 through April
30, 2003, the U.S. dollar appreciated by approximately 139.1% against
the <I>real</I>.
The Central Bank has only intervened occasionally to control unstable
movements in the foreign exchange rate. The Company cannot predict, however,
whether the Central Bank will continue to let the <I>real </I>float freely, or if in
the future, the <I>real </I>will remain at its present level or devalue further.
</FONT>
<P align="center"><FONT size="2">2</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows the commercial selling rate for U.S. dollars for
the periods and dates indicated. The information in the &#147;Average&#148; column
represents the average of the exchange rates on the last day of each month
during the years presented.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="17%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Year</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>High</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Low</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Average</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Period End</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2002</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.955</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.271</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.998</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.533</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2001</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.935</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.353</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.320</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2000</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.985</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.723</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.835</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.956</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1999</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.165</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.208</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.851</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.789</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1998</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.209</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.117</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.164</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.209</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="100%"><FONT size="2"><I>Source: </I>Central Bank</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="54%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Month</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>High</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Low</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">December 2002</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.798</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.428</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">January 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.662</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.276</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">February 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.658</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.483</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">March 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.564</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.353</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">April 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.336</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.890</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">May 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.028</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.865</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="100%"><FONT size="2"><I>Source: </I>Central Bank</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of June&nbsp;23, 2003, the U.S. dollar-<I>real </I>exchange rate was R$2.879 per
U.S.$1.00.
</FONT>
<P align="left"><FONT size="2"><B>Risk Factors</B>
</FONT>

<P align="left"><FONT size="2"><B><I>Risks Relating to Brazil</I></B></FONT>

<P align="left"><FONT size="2"><B><I>The Brazilian government exercises influence over the Brazilian economy, and
Brazilian and economic conditions have a direct effect on the Company and its
financial performance</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Brazilian economy has been characterized by frequent and occasionally
extensive intervention by the Brazilian government and unstable economic
cycles. The Brazilian government has often changed monetary, taxation, credit,
tariff and other policies to influence the course of Brazil&#146;s economy. The
Brazilian government&#146;s actions to control inflation and effect other policies
have at times involved wage and price controls, as well as other
interventionist measures, such as blocking access to bank accounts, imposing
capital controls and limiting imports into Brazil. The Company has no control
over, and cannot predict, what measures or policies the Brazilian government
may take in the future. The Company&#146;s operations and financial condition may
be adversely affected by factors, including, without limitation:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">fluctuations in exchange rates;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">interest rates;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">inflation;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">exchange control policies;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">tax policies;</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">3</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">GDP growth;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">social instability;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">liquidity of domestic capital and lending markets; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">other political, diplomatic, social and economic developments in or affecting Brazil.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Luiz In&#225;cio Lula da Silva of the Labor Party took office as President of
Brazil on January&nbsp;1, 2003. While President da Silva&#146;s government has adopted
economic measures that are more conservative than expected by some observers,
there is no certainty that these policies will continue or that President da
Silva will continue to pursue economic stabilization and liberalization
policies. The Company cannot predict what future fiscal, monetary, social
security and other policies will be adopted by Mr. da Silva&#146;s administration
and whether these policies will result in adverse consequences to the economy
and to the Company&#146;s business, results of operations or financial condition.
</FONT>
<P align="left"><FONT size="2"><B><I>The Brazilian government&#146;s actions to combat inflation may contribute
significantly to economic uncertainty in Brazil and may adversely affect the
market price of the Preferred Shares and ADSs</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Historically, Brazil experienced high rates of inflation. Inflation
itself, as well as government efforts to combat inflation, had significant
negative effects on the Brazilian economy. Inflation, actions to combat
inflation and public speculation about possible future actions also contributed
materially to economic uncertainty in Brazil and to heightened volatility in
the Brazilian securities markets.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inflation rates, as measured by the <I>&#205;ndice Geral de Pre&#231;os &#150;
Disponibilidade Interna </I>(the General Price Index &#150; Internal Availability, or
IGP-DI) were approximately 1.7%, 20.0%, 9.8%, 10.4% and 26.4% in 1998, 1999,
2000, 2001 and 2002, respectively.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Brazil may again experience high levels of inflation in the future.
Increasing prices for petroleum, the devaluation of the <I>real </I>and future
governmental actions, including further actions taken to attempt to maintain
the value of the <I>real</I>, may trigger increases in inflation. Periods of higher
inflation may have a material adverse effect on the Brazilian economy, the
Brazilian financial markets and the market price of the Company&#146;s preferred
shares (the &#147;Preferred Shares&#148;) and the ADSs. High inflation may also have a
material adverse effect on the Company&#146;s business, financial condition and
operations, especially if that inflation dampens demand for the Company&#146;s
products.
</FONT>
<P align="left"><FONT size="2"><B><I>A devaluation of the real could adversely affect the Brazilian economy and the
Company&#146;s ability to service its foreign currency-denominated debt and could
lead to a decline in the market price of the Preferred Shares and ADSs</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The exchange rate between the <I>real </I>and the U.S. dollar and the relative
rates of <I>real </I>devaluation and inflation have affected the Company&#146;s financial
results and may continue to do so in the future.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Brazilian currency has been devalued frequently during the last four
decades. Throughout this period, the Brazilian government has implemented
various economic plans and used various exchange rate policies, including
sudden devaluations, periodic mini-devaluations (during which the frequency of
adjustments has ranged from daily to monthly), exchange controls, dual exchange
rate markets and a floating exchange rate system. 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
<I>real</I> depreciated in value against the U.S. dollar by 8.5% in 2000, 15.7% in 2001 and
34.3% in 2002.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Devaluation of the <I>real </I>relative to the U.S. dollar could create
additional inflationary pressures in Brazil by generally increasing the price
of imported products and requiring recessionary government policies to curb
aggregate demand. On the other hand, appreciation of the <I>real </I>against the U.S.
dollar may lead to a deterioration of the country&#146;s current account and the
balance of payments, as well as dampen export-driven growth.
</FONT>
<P align="center"><FONT size="2">4</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although the Company manages a portion of its exchange rate risk through
foreign currency derivative instruments, a significant devaluation of the <I>real</I>
in relation to the U.S. dollar or other currencies could adversely affect the
Company&#146;s ability to pay the its foreign currency-denominated obligations, and
to pay financial expenses on that debt, particularly as the Company&#146;s revenues
are based primarily in <I>reais</I>. The Company had total foreign currency
denominated obligations in an aggregate amount equal to approximately U.S.$1.41
billion at March&nbsp;31, 2003.
</FONT>
<P align="left"><FONT size="2"><B><I>Brazilian government exchange control policies could adversely affect the
Company&#146;s ability to service its foreign currency-denominated debt</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The purchase and sale of foreign currency in Brazil is subject to
governmental control. In the past, the Central Bank has centralized certain
payments of principal on external obligations.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Many factors could cause the Brazilian government to institute a more
restrictive exchange control policy, including, without limitation, the extent
of Brazil&#146;s foreign currency reserves, the availability of sufficient foreign
exchange on the date a payment is due, the size of Brazil&#146;s debt service burden
relative to the economy as a whole, Brazil&#146;s policy towards the International
Monetary Fund, or IMF, and political constraints to which Brazil may be
subject. A more restrictive policy could affect the ability of Brazilian
debtors (including the Company) to make payments outside of Brazil to meet
foreign currency obligations under foreign currency-denominated liabilities.
</FONT>
<P align="left"><FONT size="2"><B><I>Events in other emerging markets and the Brazilian government&#146;s monetary
policies may adversely affect the availability of credit</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;External events have from time to time resulted in considerable outflows
of funds and declines in the aggregate amount of foreign investment in Brazil.
Such events include the Asian economic crisis of 1997, the Russian currency
crisis of 1998, the currency instability that Brazil encountered in 1999, the
ongoing economic crisis in Argentina and the market uncertainty before the
election of President da Silva. To defend the value of the <I>real </I>during such
events and to control inflation, the Brazilian government has maintained a
tight monetary policy with associated high interest rates and has constrained
the growth of credit and the economy. These disruptions in the Brazilian
economy could adversely affect the ability of the Company&#146;s customers to make
timely payments to the Company and could adversely affect its ability to obtain
credit in Brazil and maintain its liquidity.
</FONT>
<P align="left"><FONT size="2"><B><I>Risks Relating to The Company</I></B>
</FONT>

<P align="left"><FONT size="2"><B><I>The Company&#146;s indebtedness will require that a significant portion of its cash
flow be used to pay the principal and interest with respect to that
indebtedness</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of the corporate reorganization that led to the formation of
the Company, the Company had approximately U.S.$2.1&nbsp;billion of total
indebtedness as at December&nbsp;31, 2002. The Company had consolidated negative
working capital of U.S.$594.7&nbsp;million at December&nbsp;31, 2002, principally as a
result of its outstanding short-term indebtedness and the current portion of
its long-term debt. Part of the Company&#146;s debt strategy over the next several
years involves the Company&#146;s use of a substantial portion of its consolidated
cash flow (including from synergies resulting from the mergers that formed part
of the Company&#146;s consolidation and possibly from the sale of certain non-core
assets) to pay principal and interest with respect to this indebtedness. The
Company is also attempting to extend the average maturity of its outstanding
indebtedness, including by repaying short-term debt through longer-term
borrowings and issuing longer-term debt securities. Any failure by the Company
to refinance indebtedness coming due during the next 12-18&nbsp;months that it does
not repay using cash flow generated from its operations and from the sale of
non-core assets would adversely affect the Company and its financial condition.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The level of its indebtedness could have important consequences to holders
of ADSs, including the following:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the Company&#146;s ability to obtain any necessary financing in the
future for working capital, capital expenditures, debt service
requirements or other purposes could be limited;</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">5</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a substantial portion of the Company&#146;s cash flow from operations,
if any, must be dedicated to the payment of principal and interest on
the Company&#146;s indebtedness and may not be available for other purposes;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the Company&#146;s level of indebtedness could limit its flexibility in
planning for, or reacting to changes in, its business; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the Company&#146;s level of indebtedness could make the Company more
vulnerable in the event of a downturn in its business.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><B><I>The cyclical nature of the petrochemical industry may adversely affect the
Company&#146;s results of operations</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Brazilian petrochemical industry, including the markets in which the
Company competes, is cyclical and sensitive to changes in supply and demand
that are in turn affected by political and economic conditions in Brazil and
elsewhere. This cyclicality may adversely affect the Company&#146;s financial
performance. In particular:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">downturns in general business and economic activity may cause
demand for the Company&#146;s products to fall;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">when demand falls, the Company may be under competitive pressure to
lower its prices; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">if the Company decides to expand its plants or construct new
plants, it may do so based on an estimate of future demand that
materializes at levels lower than the Company predicted.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The global petrochemical industry is also cyclical. Historically, the
international petrochemical markets have experienced alternating periods of
limited supply, which have caused prices and profit margins to increase,
followed by capacity additions, which have resulted in oversupply and declining
prices and profit margins. The Brazilian petrochemical industry is becoming
more integrated with the global petrochemical industry for a number of reasons,
including increased demand for, and consumption of, these products in Brazil
and the ongoing integration of regional and world markets for commodity
products. In addition, the Company&#146;s prices in Brazil are related to price
trends in the global markets.
</FONT>
<P align="left"><FONT size="2"><B><I>The Company faces competition from producers of polyethylene, polypropylene,
vinyls and other petrochemical products</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company faces competition from other producers of petrochemicals in
Brazil and abroad, and prices for many of the Company&#146;s products are determined
with reference to international market prices for these products. The Company
anticipates that it may experience increasingly intense competition from
international producers, both in Brazil and in selected foreign markets in
which the Company plans to attempt to increase sales of its
polyolefins
products. For example, Dow Chemical (&#147;Dow Chemical&#148;) recently built a linear
low density polyethylene facility in Bah&#237;a Blanca, Argentina, which became
operational in 2001 with an annual capacity of 210,000 tons. In addition, Rio
Pol&#237;meros, a Brazilian petrochemical company is constructing a petrochemical
plant in Duque de Caxias, Rio de Janeiro, with an announced projected annual
capacity of 520,000 tons of ethylene, 75,000 tons of propylene and 540,000 tons
of linear low density polyethylene and high density polyethylene, which will
increase Brazilian annual production capacity of polyethylene by approximately
35%. In the vinyls market, the Company&#146;s primary competitor is Solvay Indupa
do Brasil S.A. (&#147;Solvay&#148;), with an installed annual PVC production capacity of
250,000 tons and production facilities closer to the primary PVC market in
Brazil than the Company&#146;s production facilities. In the domestic PET market,
the company competes with importers and Rhodia &#150; ster S.A.,
(&#147;Rhodia&#148;) which has an
installed PET and fiber-related annual production capacity of 290,000 tons,
more than four times larger than the Company&#146;s annual PET capacity.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company also competes with producers of imported petrochemical
products. Many of the Company&#146;s foreign competitors are larger and have
greater financial, manufacturing, technological and marketing resources than
the Company.
</FONT>
<P align="center"><FONT size="2">6</FONT>
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<P align="left"><FONT size="2"><B><I>Future adjustments in tariffs on imports that compete with its products could
cause the Company to lower its prices</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;One of the factors that the Company takes into consideration when setting
the prices for its products is the tariff rates imposed by the Brazilian
government on imports of similar products and the products of the Company&#146;s
customers. The Brazilian government has from time to time used import and
export tariffs to effect economic policies, with the consequence that tariffs
can vary considerably, especially tariffs on petrochemical products. Future
adjustments of tariffs could force the Company to lower its prices and could
have a material adverse effect on the Company&#146;s results of operations.
</FONT>
<P align="left"><FONT size="2"><B><I>The Company may face conflicts of interest in transactions with certain related
parties</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company maintains trade accounts receivable and current and long-term
payables with some of its affiliates, including COPESUL &#150; Companhia
Petroqu&#237;mica do Sul (&#147;Copesul&#148;) in the petrochemical complex located in Triunfo
in the State of Rio Grande do Sul (the &#147;Southern Complex&#148;) (which supplies the
Company with ethylene and propylene), Petr&#243;leo Brasileiro S.A. &#150; PETROBRAS
(&#147;Petrobras&#148;) (which supplies the Company with naphtha) and
Politeno Ind&#250;stria e Com&#233;rcio S.A. (&#147;Politeno&#148;)(which
purchases ethylene from the Company). Through Petrobras Qu&#237;mica S.A.
(&#147;Petroquisa&#148;), Petrobras, a petroleum company controlled by the Brazilian
government, is the indirect holder of 8.1% of the Company&#146;s common shares and
11.3% of its total capital stock. These accounts receivable and accounts
payable balances result mainly from purchases and sales of goods and services,
which are at prices and on terms equivalent to the average terms and prices of
transactions that the Company enters into with third parties. Commercial and
financial transactions between the Company and these affiliates could result in
conflicting interests.
</FONT>
<P align="left"><FONT size="2"><B><I>Some of the Company&#146;s shareholders may have the ability to influence the
outcome of corporate actions or decisions, which could affect the holders of
ADSs</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Odebrecht Group directly holds approximately 44.6% of the Company&#146;s
voting common stock, and its designees currently constitute a majority of the
members of the Company&#146;s Board of Directors (the &#147;Odebrecht Group&#148;). In
addition, some of the Company&#146;s other shareholders, consisting of Petroquisa
and two Brazilian pension funds, have veto and other rights under shareholders
agreements as described under &#147;Item&nbsp;7. Major Shareholders&#151;Shareholders Agreements.&#148;
As a result, the Odebrecht Group and these other shareholders may have the
ability to influence the outcome of some major corporate actions or decisions
requiring the approval of the Company&#146;s shareholders or its Board of Directors,
which could affect the holders of the ADSs.
</FONT>
<P align="left"><FONT size="2"><B><I>The Company may be adversely affected by high naphtha costs</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Naphtha is the principal raw material of the Company&#146;s Basic Petrochemical
Unit. In 2002, naphtha accounted, directly and indirectly, for approximately
66% of the Company&#146;s consolidated cost of sales and represented approximately
90% of the total variable costs of the Basic Petrochemicals Unit. The price of
naphtha supplied by Petrobras is linked to Amsterdam-Rotterdam-Antwerp (&#147;ARA&#148;)
quotations of naphtha and to the U.S. dollar-<I>real </I>exchange rate.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During 2002, the price of naphtha increased by approximately 56%, from
U.S.$168 per ton in January 2002 to U.S.$263 per ton on December&nbsp;31, 2002, and
reached a record high of U.S.$268.9 per ton in November 2002, due primarily to
the threat of war between the United States and Iraq. Combined with the
appreciation of the U.S. dollar against the <I>real </I>during 2002 of approximately
52%, the price of naphtha in <I>reais </I>increased by approximately 106% during 2002.
Although the average monthly price of naphtha decreased by 25.3% during the
first three months of 2003, from U.S.$294.9 in January 2003 to U.S.$269.6 in
March 2003, and the U.S. dollar depreciated against the <I>real </I>between January&nbsp;1,
2003 and May&nbsp;31, 2003, the price of naphtha may increase significantly or the
<I>real </I>may devalue significantly in the future. Although the majority of the
Company&#146;s revenues are in <I>reais</I>, the Company does not currently hedge its
exposure to changes in the price of naphtha, in part because a portion of its
sales in 2002 were exports payable in foreign currencies and the prices of its
polyethylene, polypropylene and PVC generally reflect changes in the
international market prices of these products. In periods of high volatility
in the U.S. dollar-<I>real </I>exchange rate, there is usually a lag between the time
that the U.S. dollar appreciates and the time
that the Company can effectively pass on such increased cost in <I>reais </I>to
its customers in Brazil. Accordingly, if the <I>real </I>depreciates precipitously
against the U.S. dollar in the future, the Company may not immediately be able
to pass on all of the corresponding increases in its naphtha costs to its
customers in Brazil, which could materially adversely affect its results of
operations and financial condition.
</FONT>
<P align="center"><FONT size="2">7</FONT>
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<P align="left"><FONT size="2"><B><I>One company supplies Braskem with a significant amount of its naphtha needs</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Currently, Petrobras is the only Brazilian supplier of naphtha and
supplies the majority of the naphtha consumed by producers of basic
petrochemicals in Brazil, including the Company. Petrobras produces some of
the naphtha it sells to the Company and imports the balance. Significant
damage to Petrobras&#146;s refining operations or to the port facilities through
which Petrobras imports naphtha, which refining operations and port facilities
are located in several different parts of Brazil, or to any of the pipelines
connecting the Company to Petrobras&#146;s facilities, whether as a consequence of
an accident, natural disaster, fire or otherwise, could adversely affect the
Company&#146;s operations.
</FONT>
<P align="left"><FONT size="2"><B><I>The Company manufactures products that are subject to the risk of fire
explosions and other hazards</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s operations are subject to the usual hazards, such as fires,
explosions and other accidents, associated with the manufacture of
petrochemicals and the storage and transportation of feedstocks and products.
These hazards can cause personal injury and loss of life, severe damage to or
destruction of property and equipment and environmental damage and may result
in suspension of operations. Although the Company maintains insurance coverage
for losses due to fire damage and for losses of income resulting from stoppages
due to fire, explosion or electrical damage, those insurance proceeds may not
be available on a timely basis.
</FONT>
<P align="left"><FONT size="2"><B><I>The Company&#146;s business is subject to stringent environmental regulations and
additional or more restrictive regulations could adversely affect the Company</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Brazilian petrochemical producers, including the Company, are subject to
stringent federal, state and local environmental laws and regulations
concerning human health, the handling and disposal of solid and hazardous
wastes and discharges of pollutants into the air and water. Petrochemical
producers are also sometimes subject to unfavorable market perceptions of the
environmental impact of their business, which can have an adverse effect on
their results of operations. In view of the possibility of unanticipated
regulatory or other developments, particularly as environmental laws become
more stringent in Brazil and worldwide, the amount and timing of future
expenditures required to maintain compliance could vary substantially from
their current levels and could adversely affect the availability of funds to
the Company for other capital expenditures and other purposes. See &#147;Item&nbsp;4.
Information on the Company &#150; Environmental Matters.&#148;
</FONT>
<P align="left"><FONT size="2"><B><I>The Company may be adversely affected by any future adverse decision of the
Brazilian antitrust authorities concerning its recent corporate restructuring</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of its corporate restructuring process that began in 2001, the
Company acquired the operations of OPP Qu&#237;mica S.A. (&#147;OPP Qu&#237;mica&#148;), Trikem
S.A. (&#147;Trikem&#148;), Proppet S.A. (&#147;Proppet&#148;), Polialden Petroqu&#237;mica S.A.
(&#147;Polialden&#148;) and Nitrocarbono S.A. (&#147;Nitrocarbono&#148;). In accordance with
Brazilian Law, the Company submitted the terms and conditions of the
transactions consummated in the July&nbsp;25, 2001 auction of
petrochemical assets to the Brazilian antitrust authorities
on September&nbsp;18, 2001. These authorities will determine whether these
transactions negatively impact competitive conditions in the relevant markets
in which the Company competes or whether they would negatively affect
consumers. The Company supplemented its submission to the Brazilian antitrust
authorities in order to update these authorities concerning the additional
steps that the Company took in its corporate restructuring process after
September 2001. Brazilian antitrust law does not prevent parties from closing
a transaction on a provisional basis until the Brazilian antitrust authorities
render a final decision. However, if approved, the effectiveness of the merger
is retroactive to the date on which the transaction closed. Although two of
three Brazilian antitrust authorities issued non-binding opinions in July 2002
and May 2003, respectively, recommending true unconditional approval of these
corporate restructuring transactions, the third and governing antitrust
authority is still reviewing this matter and may not agree with these opinions
and may not approve these transactions unconditionally. Any action by the
Brazilian antitrust authorities to impose conditions or performance commitments
on the Company
could materially adversely affect its business, results of operations,
financial condition and prospects. See &#147;Item&nbsp;4. Information on the Company &#150;
Antitrust Matters.&#148;
</FONT>
<P align="center"><FONT size="2">8</FONT>
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<P align="left"><FONT size="2"><B><I>The Company may be adversely affected by the unfavorable outcome of pending
litigation</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is involved in a substantial number of tax, civil and labor
disputes. In addition, the Company has challenged the application of Brazilian
federal income (social contribution) taxes to its operations and federal excise
taxes to purchases of ethylene and propylene by its Polyolefins Unit and its
Vinyls Unit. Based on the opinion of the Company&#146;s Brazilian counsel, the
Company has not made any provision in its consolidated financial statements for
these unpaid taxes or in respect of a civil lawsuit filed against the Company
by some of its class B preferred shareholders. The Company may not prevail in
these proceedings, or it may have to pay significant amounts, including
penalties and interest, to the Brazilian government in the future as payment
for the Company&#146;s liabilities, which could adversely impact its business,
results of operations, financial condition and prospects.
</FONT>
<P align="left"><FONT size="2"><B><I>Risk Factors Relating to the Preferred Shares and ADSs</I></B>
</FONT>

<P align="left"><FONT size="2"><B><I>The Preferred Shares and ADSs generally do not have voting rights</I></B></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with Law No.&nbsp;6,404/76 and Law No.&nbsp;10,303/2001 (together, the
&#147;Brazilian Corporate Law&#148;) and the Company&#146;s bylaws, holders of the preferred
shares and consequently the ADSs are not entitled to vote at meetings of the
Company&#146;s shareholders, except in very limited circumstances. This means,
among other restrictions, that preferred shareholders are not entitled to vote
to approve corporate transactions, including mergers or consolidations of the
Company with other companies. See &#147;Item&nbsp;10. Additional Information &#150;
Description of the Company&#146;s Bylaws &#150; Voting Rights &#150; Voting Rights of the
Preferred Shares.&#148;
</FONT>
<P align="left"><FONT size="2"><B><I>Exchange controls and restrictions on remittances abroad may adversely affect
holders of ADSs</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Brazilian custodian for the Preferred Shares must obtain a certificate
of registration from the Central Bank of Brazil to remit U.S. dollars abroad
for payments of dividends, any other cash distributions, or upon the
disposition of the shares and sales proceeds related thereto. If a holder of
ADSs decides to exchange its ADSs for the underlying Preferred Shares, such
holder will be entitled to continue to rely, for five business days from the
date of exchange, on the depositary&#146;s certificate of registration. Thereafter,
such holder may not be able to obtain and remit U.S. dollars abroad upon the
disposition of the Preferred Shares, or distributions relating to the Preferred
Shares, unless such holder obtains its own certificate of registration with the
Central Bank or qualifies under Resolution No.&nbsp;2,689/00 of the <I>Conselho
Monet&#225;rio Nacional </I>(the National Monetary Council or CMN), which entitles
qualified foreign investors to buy and sell securities on the Brazilian stock
exchanges without obtaining a separate certificate of registration.
</FONT>
<P align="left"><FONT size="2"><B><I>The relative volatility and liquidity of the Brazilian Securities Markets may
adversely affect holders of ADSs</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investing in securities, such as the Preferred Shares or ADSs, involving
emerging market risk, including risks relating to Brazil, involves a higher
degree of risk than investments in securities of issuers from more developed
countries, and such investments are generally considered speculative in nature.
Investments involving risks relating to Brazil, such as the Preferred Shares
and the ADSs, are subject to certain economic and political risks, including,
without limitation, changes in the regulatory, tax, economic and political
environment that may affect the ability of investors to receive payment, in
whole or in part, in respect of their investments and restrictions on foreign
investment and on repatriation of capital invested.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Brazilian securities markets are substantially smaller, less liquid
and more volatile than major securities markets in the United States. These
factors may substantially limit the ability of holders of ADSs to sell the
Preferred Shares underlying their ADSs at a price and at a time at which
holders of ADSs wish to do so. The <I>Bolsa de Valores de S&#227;o Paulo </I>(the &#147;S&#227;o
Paulo Stock Exchange&#148;, or &#147;BOVESPA&#148;), which is the principal Brazilian stock
exchange, had a market capitalization of approximately U.S.$124.0&nbsp;billion as of
December&nbsp;31, 2002 and an average daily trading volume of approximately
U.S.$190.7&nbsp;million for 2002. In comparison, the New York Stock Exchange
had a market capitalization of U.S.$13.4 trillion as of December&nbsp;31, 2002
and an average daily trading volume of approximately U.S.$40.9&nbsp;billion for
2002.
</FONT>
<P align="center"><FONT size="2">9</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There is also significantly greater concentration in the Brazilian
securities markets. The 10 largest companies in terms of market capitalization
represented approximately 46% of the aggregate market capitalization of the
BOVESPA as of December&nbsp;31, 2002. The 10 most widely traded stocks in terms of
trading volume accounted for approximately 55.4% of all shares traded on the
BOVESPA in 2002. See &#147;Item&nbsp;9. The Offer and Listing &#150;Trading on the Brazilian
Stock Exchanges.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s corporate affairs are governed by the Company&#146;s bylaws and
the Brazilian Corporate Law, which differ in certain respects from the legal
principles that would apply if the Company were incorporated in a jurisdiction
in the United States, such as Delaware or New York, or in certain other
jurisdictions outside Brazil. In addition, rights of holders of ADSs or of the
Preferred Shares under the Brazilian Corporate Law to protect their interests
relative to actions taken by the Company&#146;s Board of Directors or common
shareholders may be fewer and less well-defined than under the laws of those of
other jurisdictions outside Brazil.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of ADSs may not be able to exercise the preemptive rights relating
to the Preferred Shares underlying their ADSs unless a registration statement
under the Securities Act is effective with respect to those rights or an
exemption from the registration requirements of the Securities Act is
available. The Company is not obligated to file a registration statement with
respect to the shares relating to these preemptive rights, and the Company
cannot assure holders of ADSs that the Company will file any such registration
statement. Unless the Company files a registration statement or an exemption
from registration applies, holders of ADSs may receive only the net proceeds
from the sale of their preemptive rights by the depositary or, if the
preemptive rights cannot be sold, such rights may lapse.
</FONT>
<P align="left"><FONT size="2"><B><I>Developments in other emerging markets may adversely affect the market price of
the Preferred Shares and ADSs</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The market price of the Preferred Shares and the ADSs may be adversely
affected by declines in the international financial markets and world economic
conditions. Although economic conditions are different in each country,
investors&#146; reaction to developments in one country can affect the securities
markets and the securities of issuers in other countries, including Brazil.
Brazilian securities markets are, to varying degrees, influenced by economic
and market conditions in other emerging market countries, especially those in
Latin America. The economic recession in Argentina, Brazil&#146;s largest trading
partner in Latin America, continues to adversely affect Brazil. An escalation
of the ongoing economic turmoil in Argentina, as well as adverse economic
developments in other emerging markets (<I>i.e.</I>, the Asian economic crisis of 1997
and the 1998 Russian debt moratorium and devaluation of the Russian currency),
may adversely affect investor confidence in securities issued by Brazilian
companies, causing their market price and liquidity to suffer and, more
directly, may affect the Company&#146;s financial condition, its ability to raise
capital when needed and the market price of the Preferred Shares and the ADSs.
</FONT>
<!-- link2 "ITEM 4. INFORMATION ON THE COMPANY" -->
<DIV align="left"><A NAME="004"></A></DIV>
<P align="left"><FONT size="2"><B>ITEM 4. INFORMATION ON THE COMPANY</B>
</FONT>

<P align="left"><FONT size="2"><B>History and Development of the Company</B></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Braskem S.A. is a <I>sociedade an&#244;nima </I>(corporation)&nbsp;organized under the laws
of Brazil for the purpose of manufacturing, trading, importing and exporting
chemical and petrochemical products and fuels, as well as producing and
supplying steam, water, compressed air and electric power to companies
operating in the Cama&#231;ari Petrochemical Complex in Bahia, Brazil (the
&#147;Northeastern Complex&#148;), and the rendering of services to those companies.
Braskem is the new corporate name of Copene Petroqu&#237;mica do Nordeste S.A.
(&#147;Copene&#148;). The current organizational structure of the Company is the result
of a significant corporate restructurings undertaken in Brazil, integrating six
major Brazilian petrochemical companies: Copene; OPP Qu&#237;mica; Trikem; Proppet;
Nitrocarbono and Polialden.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Copene was founded in 1972 as Petroqu&#237;mica do Nordeste Copene Ltda. for
the purpose of planning, executing and coordinating the activities of the
Northeastern Complex. The construction of the Northeastern Complex formed part
of a Brazilian federal government development policy implemented in the early
1970s to diversify the
geographical distribution of industrial assets to promote economic growth
across different regions in Brazil. At that time, the only petrochemical
complex in Brazil was located in the State of S&#227;o Paulo. On June&nbsp;18, 1974,
Copene was duly incorporated as a <I>sociedade an&#244;nima </I>(corporation)&nbsp;under the
laws of Brazil and renamed Copene
</FONT>
<P align="center"><FONT size="2">10</FONT>
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<P align="left"><FONT size="2">Petroqu&#237;mica do Nordeste S.A. Since 1978,
when Copene commenced operations, the Company has grown to become the largest
basic petrochemicals company in Brazil and Latin America.
</FONT>
<P align="left"><FONT size="2"><B><I>Acquisition of Control by Norquisa</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to August 1995, Petroquisa, the petrochemical affiliate of
Petrobras, owned 36.2% of the total capital of Copene, representing 48.2% of
the voting capital of Copene. Petrobras historically provided all of the
Company&#146;s requirements of naphtha, its principal raw material. In August 1995,
as part of the Brazilian government&#146;s privatization program, Petroquisa sold
14.8% of the total capital of Copene, representing 32.8% of its voting capital,
through an auction. Nordeste Qu&#237;mica S.A. - Norquisa (&#147;Norquisa&#148;), a company
owned by petrochemical producers located in the Northeastern Complex, acquired
a portion of the shares sold in the auction, and the remainder was acquired by
various Brazilian pension funds. Each of the shareholders of Norquisa
purchased basic petrochemical products and utilities from Copene under
long-term contracts. At the time of this auction, the shareholders of Norquisa
were:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Participa&#231;&#245;es Petroqu&#237;micas do Nordeste Ltda. (&#147;Petronor&#148;), which
held 23.7% of the voting stock of Norquisa. Petronor was a wholly
owned subsidiary of Polialden, which was controlled by Conepar -
Companhia Nordeste de Participa&#231;&#245;es (&#147;Conepar&#148;).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Pronor Petroqu&#237;mica S.A. (&#147;Pronor&#148;), which held 16.0% of the voting
stock of Norquisa. Pronor is a wholly owned subsidiary of Petroqu&#237;mica
da Bahia S.A. (&#147;PQBA&#148;), a member of a group of companies controlled by
the Mariani family (the &#147;Mariani Group&#148;).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Trikem, which held 16.0% of the voting stock of Norquisa. Trikem
was controlled at that time by Odebrecht S.A. (&#147;ODB&#148;), the holding
company of the Odebrecht Group.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Politeno, which held 12.5%
of the voting stock of Norquisa. The principal shareholders of
Politeno at that time were Conepar, PSQ Investimentos e Participa&#231;&#245;es
Ltda. (&#147;Suzano&#148;), Sumitomo Chemical Company Limited (&#147;Sumitomo
Chemical&#148;) and Itochu Corporation (&#147;Itochu&#148;).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">EDN - Estireno do Nordeste S.A. (&#147;EDN&#148;), which held 12.5% of the
voting stock of Norquisa. EDN is controlled by Dow Chemical.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Oxiteno do Nordeste S.A. (&#147;Oxiteno&#148;), which held 10.4% of the
voting stock of Norquisa. Oxiteno is controlled by Ultrapar
Participa&#231;&#245;es S.A.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Polipropileno S.A. (&#147;Polipropileno&#148;), which held 8.9% of the voting
stock of Norquisa. Polipropileno is controlled by Suzano.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Following this auction, 58.4% of Copene&#146;s voting capital was owned by
Norquisa, 1.7% was owned by Odebrecht Qu&#237;mica S.A., a member of the Odebrecht
Group (&#147;Odequi&#148;), 15.4% was owned by Petroquisa, 5.8% was owned by Previ &#150;
Caixa de Previd&#234;ncia dos Funcion&#225;rios do Banco do Brasil, the pension fund of
Banco do Brasil (&#147;Previ&#148;), 5.7% was owned by Funda&#231;&#227;o Petrobras de Seguridade
Social &#150; Petros, the pension fund of Petrobras (&#147;Petros&#148;), and the remainder
was owned by various other Brazilian pension funds and by several private
investors.
</FONT>
<P align="left"><FONT size="2"><B><I>The Econ&#244;mico S.A. Empreendimentos Auction</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 1995, Banco Econ&#244;mico S.A., a Brazilian financial institution (&#147;Banco
Econ&#244;mico&#148;), collapsed and the Central Bank intervened. At the time of Banco
Econ&#244;mico&#146;s collapse, Banco Econ&#244;mico owned 56.3% of the capital stock,
representing 63.8% of the voting stock, of Conepar. The other shareholders of
Conepar were:
</FONT>
<P align="center"><FONT size="2">11</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Intercapital Com&#233;rcio e Participa&#231;&#245;es Ltda. (&#147;Intercapital&#148;), a
company controlled by the Odebrecht Group and the Mariani Group, which
held 31.9% of the capital stock, representing 36.2% of the voting
stock, of Conepar; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">BNDES Participa&#231;&#245;es S.A. &#150; BNDESPAR (&#147;BNDESPAR,&#148; the holding
company of the Brazilian National Bank for Economic and Social
Development or BNDES), which owned 11.8% of the capital stock of
Conepar.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Conepar, in turn, owned:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">less than 1.0% of the voting stock of Norquisa;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">35.0% of the voting stock, representing 31.0% of the capital stock,
of Politeno, a producer of thermoplastic resins; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">66.7% of the voting stock, representing 42.6% of the capital stock,
of Polialden, a producer of thermoplastic resins.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of an effort to restructure and reconsolidate the petrochemical
sector in Brazil, the Central Bank, as liquidator of Banco Econ&#244;mico, conducted
an auction (the &#147;Auction&#148;) on July&nbsp;25, 2001 to sell Econ&#244;mico S.A.
Empreendimentos (&#147;ESAE&#148;), a company formed to hold the capital stock of Conepar
that was owned by Banco Econ&#244;mico. In the Auction, Nova Cama&#231;ari Participa&#231;&#245;es
S.A. (&#147;Nova Cama&#231;ari&#148;), an entity formed by the Odebrecht Group with the
specific purpose of participating in the Auction, acquired ESAE.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the terms of the Auction, Nova Cama&#231;ari was obligated to comply with
the shareholders&#146; agreement of Conepar and the tag-along rights of Banco
Econ&#244;mico, ESAE, Odequi, Trikem, PQBA, Nitrocarbono, Pronor, Companhia
Brasileira de Poliuretanos, Conepar and Intercapital. Members of the Odebrecht
Group and of the Mariani Group exercised their tag-along rights with respect to
their shares of Intercapital, and BNDESPAR exercised its tag-along rights with
respect to its shares of Conepar. As a result, Nova Cama&#231;ari acquired all of
the capital stock of Intercapital and was obligated to purchase the capital
stock of Conepar owned by BNDESPAR. Following these acquisitions, Nova
Cama&#231;ari owned, directly and indirectly, 100% of Conepar&#146;s voting capital
stock.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, members of the Odebrecht Group and the Mariani Group
exercised their tag-along rights with respect to their shares of Proppet, a
company that was wholly owned by members of the Odebrecht Group and the Mariani
Group. As a result, Nova Cama&#231;ari acquired all of the capital stock of
Proppet.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the Auction, members of the Odebrecht Group acquired
the capital stock of Norquisa held by Petronor for R$241.9&nbsp;million and the
capital stock of Norquisa held by Trikem. As a result, the Odebrecht Group
owned 39.7% of the voting capital of Norquisa and, together with the Mariani
Group, held a combined 55.8% of the voting stock of Norquisa. On July&nbsp;27,
2001, Odequi and PQBA entered into a shareholders&#146; agreement with respect to
their direct and indirect equity interests in and control of Norquisa and the
Company. In addition, on July&nbsp;3, 2001 and July&nbsp;20, 2001, Odequi and PQBA
entered into memoranda of understanding with respect to the terms of
shareholders agreements with Petroquisa, Petros and Previ. See &#147;Item&nbsp;7. Major
Shareholders and Related Party Transactions &#150; Shareholders Agreements.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On the same day as the Auction, Copene acquired Nova Cama&#231;ari (the &#147;Nova
Cama&#231;ari Acquisition&#148;). The main objective of the Nova
Cama&#231;ari Acquisition
was to restructure several Brazilian petrochemical companies to create a
company with integrated operations, allowing greater operational and fiscal
efficiency than was enjoyed by Copene alone. As part of the corporate
restructuring process in September 2001:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Nova Cama&#231;ari closed the acquisition of the non-voting capital
stock of Conepar owned by BNDESPAR;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Nova Cama&#231;ari merged with and into Copene;</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">12</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Intercapital merged with and into Copene; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Proppet merged with and into Copene.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The structure of the Company immediately following these transactions is
set forth below. The percentages above or to the left of the connecting lines
represent the percentage of voting stock owned by the parent of each entity and
the percentages below or to the right of the connecting lines represent the
percentage of the total capital stock owned by the parent of each entity.
</FONT>
<P align="left"><FONT size="2"><IMG src="y88049y8804900.gif" alt="&#091;FLOW CHART&#093;">
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap colspan="3"><FONT size="2"><HR noshade size="1" width="20%"></FONT></TD>
</TR>


<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(1)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Copene did not control the operating and financial policies of Norcell
S.A. (&#147;Norcell&#148;) because of certain covenants contained in a shareholders&#146;
agreement dated April&nbsp;20, 1989 between Copene and Riocell S.A.
(&#147;Riocell&#148;).</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><B><I>The Related Party Mergers</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of the Company&#146;s strategy to create a company with integrated
operations, on August&nbsp;16, 2002:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Copene merged with OPP Produtos Petroqu&#237;micos S.A. (&#147;OPP
Produtos&#148;), the holding company of the Odebrecht Group&#146;s chemical and
petrochemical assets (the &#147;OPP Produtos Merger&#148;), and exchanged a
portion of its shares in an aggregate amount of U.S.$20.0&nbsp;million for
OPP Produtos&#146;s stock based on a net asset valuation of OPP Produtos
(excluding OPP Produtos&#146;s interest in OPP Qu&#237;mica and Trikem); and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Copene merged with 52114 Participa&#231;&#245;es S.A. (&#147;52114
Participa&#231;&#245;es&#148;), the holding company of the Mariani Group&#146;s chemical
and petrochemical assets (the &#147;52114 Merger&#148; and, together with the OPP
Produtos Merger, the &#147;Related Party Mergers&#148;), and exchanged a portion
of its shares in an aggregate amount of U.S.$20.9&nbsp;million for 52114
Participa&#231;&#245;es&#146;s stock based on a net asset valuation of 52114
Participa&#231;&#245;es.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">Upon the completion of the Related Party Mergers, the corporate name of Copene
was changed to Braskem S.A.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
principal assets of OPP Produtos were:</FONT>
<P align="center"><FONT size="2">13</FONT>

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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">100% of the voting stock, representing 81.2% of the capital stock,
of OPP Qu&#237;mica, a company engaged in the production of polyethylene and
polypropylene.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">29.5% of the capital stock and voting stock of Copesul, a company
that produces basic petrochemicals for the Southern Complex.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;OPP Produtos owned 64.4% of the voting stock, representing
36.3% of the capital stock, of Trikem, the only vertically integrated
manufacturer of PVC in Brazil.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company issued shares representing 43.7% of its capital stock and
voting stock to ODB as consideration for the capital stock of OPP Produtos.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The principal asset of 52114 Participa&#231;&#245;es was 92.3% of the capital stock
of Nitrocarbono, a public company engaged in the manufacture of caprolactam,
which is used in the production of textile thread (Nylon-6) and ammonium
sulfate, which is used as a fertilizer. The Company issued shares representing
3.6% of its capital stock and voting stock to Pronor as consideration for the
capital stock of 52114 Participa&#231;&#245;es.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The structure of the Company as of December&nbsp;31, 2002 is set forth below.
The percentages above or to the left of the connecting lines represent the
percentage of voting stock owned by the parent of each entity and the
percentages below or to the right of the connecting lines represent the
percentage of the total capital stock owned by the parent of each entity.
</FONT>
<P align="left"><FONT size="2"><IMG src="y88049y8804901.gif" alt="&#091;FLOW CHART&#093;">
</FONT>
<P align="right"><FONT size="2"><I>(footnotes on following page)</I></FONT>

<P align="center"><FONT size="2">14</FONT>

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<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(1)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Represents 73.1% of the voting and total capital stock of Tegal Terminal
de Gases, Ltda. (&#147;Tegal&#148;) owned by Braskem, 6.4% of the voting and total
capital stock of Tegal owned by Trikem and 2.4% of the voting and total
capital stock of Tegal owned by OPP Qu&#237;mica.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(2)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Represents 17.7% of the voting and total capital stock of Cetrel S.A. &#150;
Empresa de Prote&#231;&#227;o Ambiental (&#147;Cetrel&#148;) owned by Braskem, 14.5% of the
voting and total capital stock of Cetrel owned by Trikem, 2.7% of the
voting and total capital stock of Cetrel owned by Nitrocarbono, 0.7% of
the voting and total capital stock of Cetrel owned by OPP Qu&#237;mica, and
0.4% of the voting and total capital stock of Cetrel owned by Polialden.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(3)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Braskem has no control over the operating and financial policies of
Norcell as a result of covenants contained in a shareholders agreement
dated April&nbsp;20, 1989 between Copene and Riocell.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(4)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Represents 20.7% of the voting and total capital stock of Copesul owned
by Braskem, 3.0% of the voting and total capital stock of Copesul owned by
OPP Qu&#237;mica, and 5.8% of the voting and total capital stock of Copesul
owned by OPE Investimentos S.A. (&#147;OPE Investimentos&#148;). OPP Qu&#237;mica owns
89.4% of the capital stock, representing 92.1% of the voting stock, of OPE
Investimentos.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(5)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The name of Conepar was changed to Copene Participa&#231;&#245;es S.A. (&#147;Copene
Participa&#231;&#245;es&#148;) in April 2002.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(6)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Represents 5.3% of the capital stock Trikem owned by Braskem, and 64.4%
of the voting capital stock, representing 36.3% of the total capital
stock, of Trikem owned by OPP Qu&#237;mica. The capital stock of Trikem owned
by Braskem is non-voting.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><B><I>Recent Developments</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since December&nbsp;31, 2002, the Company has completed the following
transactions:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">In February 2003, as required by
the Brazilian Corporate Law as a
result of the merger of 52114 Participa&#231;&#245;es into the Company, the
Company conducted an exchange offer for the remainder of the voting
capital of Nitrocarbono. On February&nbsp;13, 2003, the Company purchased
the tendered shares, and the Company at such time owned approximately
100% of the voting capital stock representing 93.8% of the total
capital stock of Nitrocarbono. The Company exchanged 1,612,169 of its
class A preferred stock for 2,257,935 common shares of Nitrocarbono.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">On March&nbsp;31, 2003, the Company merged with OPP Qu&#237;mica, ESAE and
Nitrocarbono. Before these mergers, OPP Qu&#237;mica and ESAE were wholly
owned subsidiaries of the Company. Before the Company&#146;s merger with
OPP Qu&#237;mica, Odequi distributed the shares of OPP Qu&#237;mica to Braskem.
In connection with its merger with Nitrocarbono, the Company issued
67,698 shares of its class A preferred stock to the former shareholders
of Nitrocarbono.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s structure today is set forth below. The percentages above
or to the left of the connecting lines represent the percentage of voting stock
owned by the parent of each entity and the percentages below or to the right of
the connecting lines represent the percentage of the total capital stock owned
by the parent of each entity. All of these companies are organized under
Brazilian law.
</FONT>
<P align="center"><FONT size="2">15</FONT>
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<P align="left"><FONT size="2"><IMG src="y88049y8804902.gif" alt="(FLOW CHART)">
</FONT>

<hr width="10%" noshade size="1" align="left">
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(1)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Represents 84.4% of the voting and total capital stock of Tegal owned by
the Braskem and 6.4% of the voting and total capital stock of Tegal owned
by Trikem.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(2)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Represents 21.1% of the voting and total capital stock of Cetrel owned by
Braskem, 14.5% of the voting and total capital stock of Cetrel owned by
Trikem, and 0.5% of the voting and total capital stock of Cetrel owned by
Polialden.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(3)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Braskem has no control over the operating and financial policies of
Norcell as a result of covenants contained in a shareholders agreement
dated April&nbsp;20, 1989 between Copene and Riocell.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(4)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Represents 23.7% of the voting and total capital stock of Copesul owned
by Braskem and 5.8% of the voting and total capital stock of Copesul owned
by OPE Investimentos. Odequi owns 89.4% of the capital stock,
representing 92.1% of the voting stock, of OPE Investimentos.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><B>Controlling Shareholder</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Odebrecht Group is a group of companies that was formed by the
Odebrecht family in the Northeastern state of Bahia beginning in 1945. As of
December&nbsp;31, 2002, the Odebrecht Group was one of the 10 largest Brazilian
private-sector conglomerates in terms of revenue. The main sectors in which
the Odebrecht Group participates are:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">heavy construction and engineering through Construtora Norberto Odebrecht S.A.;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">chemicals and petrochemicals through the Company; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">infrastructure and public services through Odebrecht Servi&#231;os de Infraestrutura S.A.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><B>Registered and Principal Executive Officers of the Company</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s registered office is at Rua Eteno 1561, Cama&#231;ari, Bahia
42810-000 and its telephone number at this address is 55-71-632-5200. The
Company&#146;s principal executive office is at Av. Na&#231;&#245;es Unidas, 4777, CEP
05477-000 S&#227;o Paulo, SP, Brazil, and its telephone number at this address is
55-11-3443-9999.
</FONT>

<P align="center"><FONT size="2">16</FONT>

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<P align="left"><FONT size="2"><B>Material Subsidiaries and Equity Investees</B>
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2002, the Company&#146;s significant subsidiaries were
Trikem, OPP Qu&#237;mica, Polialden and Nitrocarbono. In addition, the Company&#146;s
equity investments in Copesul and Politeno have a significant impact on the
Company&#146;s Consolidated Financial Statements. Set forth below is a summary of
the Company&#146;s equity investments in, and the operations of, these companies.
</FONT>
<P align="left"><FONT size="2"><B><I>Trikem</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trikem is a <I>sociedade an&#244;nima </I>(corporation)&nbsp;organized under the laws of
Brazil. At December&nbsp;31, 2002, the Company owned directly and
indirectly 64.4%
of the voting capital stock, and 41.5% of the total capital stock, of Trikem.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s Vinyls Unit is comprised of the operations of Trikem.
Trikem is the only vertically integrated producer of PVC in Brazil. Its
production is integrated through the production of chlorine and other raw
materials. Trikem also manufactures and sells caustic soda, EDC and chlorine.
Trikem&#146;s activities are conducted at five industrial plants, two located in the
Northeastern Complex, one in S&#227;o Paulo, and one in Macei&#243; and Marechal Deodoro,
Alagoas. For details of these operations, see &#147;&#151;Overview of Braskem&#146;s
Operations&#151;The Vinyls Unit.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company, through OPP Qu&#237;mica, which merged with and into the Company
on March&nbsp;31, 2003, ODB and BNDESPAR have entered into a shareholders&#146; agreement
in respect of their shares of Trikem. Under the shareholders&#146; agreement, the
Company and ODB have agreed to vote their shares to elect one member of
Trikem&#146;s board of directors designated by BNDESPAR. To ensure that BNDESPAR
always designates at least one member of Trikem&#146;s board of directors, the
Company and ODB agreed to maintain voting control over Trikem (through
agreement or otherwise). If, however, the Company and ODB collectively are
unable to elect a majority of the board of directors plus one member designated
by BNDESPAR, the Company and ODB agree to take all steps in order to appoint a
non-voting member of Trikem&#146;s board of directors to represent BNDESPAR. Under
the shareholders&#146; agreement, the Company and ODB also granted tag-along rights
to BNDESPAR in the event that they sell their voting control of Trikem to a
third party. BNDESPAR also may require the Company and ODB to purchase its
Trikem shares if they do not comply with the terms of the shareholders&#146;
agreement and do not cure any such non-compliance within a specified period.
The shareholders&#146; agreement expires on August&nbsp;24, 2011, or on any earlier date
that BNDESPAR ceases to hold more than 10.0% of the Trikem&#146;s capital stock, or
more than 5.0% of the capital stock of any successor company.
</FONT>
<P align="left"><FONT size="2"><B><I>OPP Qu&#237;mica</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;OPP Qu&#237;mica was a <I>sociedade an&#244;nima </I>(corporation)&nbsp;organized under the laws
of Brazil. At December&nbsp;31, 2002, the Company indirectly owned 100% of the
capital stock of OPP Qu&#237;mica. OPP Qu&#237;mica was merged into the Company on March
31, 2003.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to its merger into the Company, the activities of OPP Qu&#237;mica
included fabricating, processing, enhancing, manufacturing, mixing, importing,
exporting, purchasing, distributing and selling plastic resins, as well as raw
materials, derivates and related products, and providing technical and
administrative consulting services relating to these activities. OPP Qu&#237;mica
also acted as a holding company for its subsidiaries and its equity investments
in associated companies.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to its merger into the Company on March&nbsp;31, 2003, OPP Qu&#237;mica
operated four plants, three located at the Southern Complex and one located in
the Northeastern Complex. For details of these operations, see &#147;&#151;Overview of
the Company&#146;s Operations&#151;The Polyolefins Unit.&#148;
</FONT>
<P align="left"><FONT size="2"><B><I>Polialden</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Polialden is a <I>sociedade an&#244;nima </I>(corporation)&nbsp;organized under the laws of
Brazil. At December&nbsp;31, 2002, the Company indirectly owned 66.6% of the voting
capital stock and 42.6% of the total capital stock, of Polialden.
</FONT>
<P align="center"><FONT size="2">17</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Polialden is engaged in manufacturing, processing, selling, importing and
exporting high density polyethylene (ultra high molecular weight polyethylene)
and other chemical and petrochemical products. Polialden operates an
industrial unit in the Northeastern Complex. For details of these
operations, see &#147;&#151;Overview of the Company&#146;s Operations&#151;The Polyolefins Unit.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s subsidiary, Conepar has entered into a shareholders&#146;
agreement with Mitsubishi Chemical Industries Limited (&#147;Mitsubishi&#148;)
(representing itself and Nissho Iwai Corporation (&#147;Nissho Iwai&#148;)) with respect
to its shares of Polialden. Mitsubishi owns 16.6% of the voting stock,
representing 6.8% of the capital stock, of Polialden. Under this shareholders&#146;
agreement, each of Conepar and Mitsubishi has agreed with Mitsubishi not to
cause Polialden to take certain actions unless the other party agrees,
including amending Polialden&#146;s bylaws, dissolving or liquidating Polialden,
merging Polialden with another company, redeeming shares of its stock or debt
obligations, selling its fixed assets, encumbering its property and engaging in
transactions with certain related parties, in some cases subject to exceptions.
The shareholders&#146; agreement provides that Conepar will agree with Mitsubishi
with respect to the nomination of Polialden&#146;s board of directors, executive
officers and fiscal council. However, as Conepar owns the majority of the
voting stock, if it is unable to agree with Mitsubishi, Conepar has the right
to appoint the directors and executive officers.
</FONT>
<P align="left"><FONT size="2"><B><I>Nitrocarbono</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Nitrocarbono was a <I>sociedade an&#244;nima </I>(corporation)&nbsp;organized under the
laws of Brazil. At December&nbsp;31, 2002, the Company owned 92.2% of the capital
stock, representing 95.4% of the voting capital stock, of Nitrocarbono.
Nitrocarbono was merged into the Company on March&nbsp;31, 2003.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to its merger into the Company, Nitrocarbono was engaged in the
manufacture, processing, trade, import, export and other activities related to
the production and sale of caprolactam, which is used in the production of
textile thread (Nylon-6) and ammonium sulfate, which is used as a fertilizer,
as well as by-products of caprolactam. Nitrocarbono also acted as a holding
company for its equity investments in associated companies.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Nitrocarbono operated one industrial unit in the Northeastern Complex.
For details of these operations, see &#147;&#151;Overview of the Company&#146;s Operations&#151;The
Business Development Unit.&#148;
</FONT>

<P align="left"><FONT size="2"><B><I>Copesul</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Copesul is a <I>sociedade an&#244;nima </I>(corporation)&nbsp;organized under the laws of
Brazil. At December&nbsp;31, 2002, the Company owned, directly and indirectly,
29.5% of the voting and total capital stock of Copesul.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Copesul is engaged in the manufacture, trade, import and export of basic
petrochemical products and the production and supply of utilities, such as
steam, water, compressed air and electrical energy, and the supply of those
utilities to the companies in the Southern Complex, and the provision of
services to companies in the Southern Complex. The Company currently purchases
ethylene and propylene, the principal raw materials used by the Company&#146;s
plants in the Southern Complex, from Copesul.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has entered into a shareholders&#146; agreement with Ipiranga
Petroqu&#237;mica S.A. (&#147;Ipiranga&#148;) with respect to the Company&#146;s shares of Copesul.
Ipiranga owns 29.4% of the voting and total capital stock of Copesul. Through
this shareholders&#146; agreement, the Company and Ipiranga jointly control Copesul.
The Company has a right of first refusal in respect of sales by Ipiranga of
any of its shares in Copesul. The Company has agreed to consult with Ipiranga
prior to any meeting of the board of directors or shareholders of Copesul and
to vote its shares together with Ipiranga with respect to certain matters,
including policies relating to the allocation of the excess amounts of raw
materials, policies relating to the distribution of profits, the election of
members of the board of directors, changes to Copesul&#146;s bylaws, approval of
indebtedness in excess of certain limits, sales of assets in excess of certain
limits, investments in excess of certain limits and any merger of Copesul with
another company. The Company has also agreed that neither it nor Ipiranga will
vote to approve any of the above matters unless the Company and Ipiranga vote
at least three-quarters of the shares held by them and such action at a meeting
of the parties to the shareholders&#146; agreement, or if no quorum is obtained at
such meeting, of three-quarters of the shares present at a second meeting.
</FONT>

<P align="center"><FONT size="2">18</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The shareholders&#146; agreement provides that the Company will vote with
Ipiranga in a manner designed to ensure that both the Company and Ipiranga are
able to elect the maximum possible directors of Copesul. This shareholders&#146;
agreement is effective until August 2022. The parties to this shareholders&#146;
agreement have agreed not to enter into shareholders&#146; agreements with any other
shareholders of Copesul.
</FONT>
<P align="left"><FONT size="2"><B><I>Politeno</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Politeno is a <I>sociedade an&#244;nima </I>(corporation)&nbsp;organized under the laws of
Brazil. At December&nbsp;31, 2002, the Company owned 35.0% of the voting capital
stock, representing 34.7% of the total capital stock of Politeno.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Politeno is engaged in the manufacture, processing, direct or indirect
trade, consignment, export, import and transportation of polyethylene,
principally LDPE, LLDPE and HDPE, and certain byproducts, principally ethylene
vinyl acetate. Politeno also acts as a holding company for its subsidiaries
and its equity investments in associated companies. Politeno currently
purchases ethylene, its principal raw material, from the Company.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company (through Conepar) has entered into a shareholders&#146; agreement
with Suzano, Sumitomo Chemical and Itochu with respect to its shares of
Politeno. Suzano owns 35.0% of the voting stock, representing 34.7% of the
total capital stock of Politeno, Sumitomo Chemical owns 20.0% of the voting
stock, representing 16.8% of the total capital stock of Politeno, and Itochu
owns 10.0% of the voting stock, representing 8.4% of the total capital stock of
Politeno. The Company has the right to elect two of the seven members of the
board of directors of Politeno and, together with Suzano, the right to elect a
third member of the board of directors, which right is exercised alternatively
by the Company and Suzano (<I>e.g</I>., Suzano elects a member of the board of
directors for one term and then the company elects a member of the board of
directors for the succeeding term). The Company also has the right to elect
one of Politeno&#146;s six executive officers.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has agreed in the Politeno shareholders&#146; agreement that it
will attempt to reach unanimous decisions with respect to certain actions to be
taken by the board of directors or shareholders of Politeno, including changes
to Politeno&#146;s bylaws, subject to certain exceptions, dissolution or liquidation
of Politeno, the merger of Politeno with another company, transactions with
affiliates of Politeno in excess of specified amounts or in excess of specified
durations, encumbering of assets of Politeno in excess of specified amounts and
entering into contracts or indebtedness in excess of certain specified amounts.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company also has interests in other companies in respect of which it
has entered into shareholders&#146; agreements, including Petroflex Ind&#250;stria e
Com&#233;rcio S.A. (&#147;Petroflex&#148;), Norcell, Borealis-OPP S.A. (&#147;Borealis-OPP&#148;) and
Copene Mon&#244;meros S.A. (&#147;Copene Mon&#244;meros&#148;).
</FONT>
<P align="left"><FONT size="2"><B>Principal Capital Expenditures</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s capital expenditures were U.S.$115.5&nbsp;million in 2002,
U.S.$146.3&nbsp;million in 2001 and U.S.$58.4&nbsp;million in 2000. The Company&#146;s
principal capital expenditure projects during 2000 through 2002 were:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the expansion of the Company&#146;s ethylene production capacity at the Northeastern Complex;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the upgrade in the facilities of the Aratu port terminal and the related pipeline system; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">other operating improvements made in the Company&#146;s Vinyls,
Polyolefins and Business Development Units.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is currently completing the expansion of the ethylene
production capacity of its pyrolysis plant that is part of the Olefins Unit 1.
Upon completion of this expansion by the end of 2003, this
plant&#146;s ethylene production capacity will reach 1,280,000 tons of annual nominal capacity. The
total cost of this expansion is estimated at U.S.$67.5&nbsp;million, of which
U.S.$61.0&nbsp;million was incurred in 2002.
</FONT>

<P align="center"><FONT size="2">19</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In response to the termination of Petrobras&#146;s monopoly over naphtha supply
in Brazil, in 2001, the Company invested in the adaptation of the existing
maritime pier located at Aratu and the construction of pipelines, storage tanks
and other facilities necessary to receive and transport imported naphtha to its
basic petrochemicals plants. The total cost of this project was approximately
U.S.$37&nbsp;million.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each of the Company&#146;s business units undertakes a regular program of
maintenance shutdowns. The pyrolysis plant that is part of the Olefins Unit 1
was shutdown for 92&nbsp;days in 2002, which shutdown took place for the performance
of regular maintenance and expansion of the plant&#146;s ethylene production
capacity, which expansion project is expected to be completed by the end of
2003. The pyrolysis plant that is part of Olefins Unit 2 is scheduled to be
shutdown for maintenance in November 2003. The Company coordinates the
maintenance cycles of its polyolefins plants in the Northeastern Complex with
those of its basic petrochemicals plants and of its polyolefins plants in the
Southern Complex with those of Copesul. The Company&#146;s PVC, caustic soda, PET
and caprolactam plants are shut down for maintenance every two years.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;19, 2000, OPP Petroqu&#237;mica S.A. (&#147;OPP Petroqu&#237;mica,&#148; a
predecessor of OPP Qu&#237;mica) sold 80% of its ownership and
voting interest in OPP Pol&#237;meros Avan&#231;ados S.A. (&#147;OPP Pol&#237;meros&#148;) to Borealis
A/S, a European group, for cash. OPP Pol&#237;meros then changed its name to
Borealis-OPP. The Company, through OPP Petroqu&#237;mica, has agreed to continue to
supply polypropylene resins to Borealis-OPP for a period of at least 10&nbsp;years
on market terms. Borealis-OPP produces specialized compounds in two production
facilities for use in manufacturing applications in the automotive, appliance
and injection-molded furniture industries.
</FONT>
<P align="left"><FONT size="2"><B>Petrochemical Industry Overview</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The petrochemical industry transforms crude oil by-products or natural gas
into widely used consumer and industrial goods. The Brazilian petrochemical
industry is generally organized into first, second and third generation
producers based on the stage of transformation of various raw materials, or
feedstocks.
</FONT>
<P align="left"><FONT size="2"><B><I>First Generation Producers</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Brazil&#146;s first generation producers, which are referred to as &#147;crackers,&#148;
break down or &#147;crack&#148; naphtha, their principal feedstock, into basic
petrochemicals. The crackers purchase their naphtha, which is a by-product of
the oil refining process, primarily from Petrobras, as well as other refineries
located outside of Brazil. The basic petrochemicals produced by the crackers
include (1)&nbsp;olefins, primarily ethylene, propylene and butadiene and (2)
aromatics, such as benzene, toluene and xylenes. The Company, Copesul, and
Petroqu&#237;mica Uni&#227;o (&#147;PQU&#148;), operate Brazil&#146;s three crackers and sell these
basic petrochemicals to second generation producers. The basic petrochemicals,
which are in the form of either gases or liquids, are transported to the second
generation producers&#146; plants, generally located near the crackers, through
pipelines for further processing.
</FONT>
<P align="left"><FONT size="2"><B><I>Second Generation Producers</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Second generation producers process the basic petrochemicals purchased
from the crackers to produce thermoplastic resins and intermediate
petrochemicals. These products include (1)&nbsp;polyethylene, polystyrene and PVC
(each produced from ethylene), (2)&nbsp;polypropylene and acrylonitrile (each
produced from propylene), (3)&nbsp;caprolactam (produced from benzene) and (4)
polybutadiene (produced from butadiene). There are approximately 48 second
generation producers operating in Brazil. The intermediate petrochemicals are
produced in solid form as plastic pellets or powders and are transported by
truck to third generation producers, which generally are not located near the
second generation producers. The Company is the only integrated first and
second generation petrochemical company in Brazil.
</FONT>
<P align="center"><FONT size="2">20</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2"><B><I>Third Generation Producers</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Third generation producers, known as transformers, purchase the
intermediate petrochemicals from second generation producers and transform them
into final products. These final products include plastics (produced from
polyethylene, polypropylene and PVC), acrylic fibers (produced from
acrylonitrile), nylon (produced from caprolactam), elastomers (produced from
butadiene) and disposable containers (produced from polystyrene). Third
generation producers produce a variety of consumer and industrial goods,
including containers and packaging materials, such as bags, film and bottles,
textiles, detergents, paints, automobile parts, toys and consumer electronic
goods. There are over 6,000 third generation producers operating in Brazil.
</FONT>
<P align="left"><FONT size="2"><B><I>Petrochemical Complexes</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The production of first and second generation petrochemicals in Brazil
centers around three major complexes. These are the Northeastern Complex
located in Cama&#231;ari in the State of Bahia, the S&#227;o Paulo complex located in
Capuava in the State of S&#227;o Paulo (the &#147;S&#227;o Paulo Complex&#148;), and the Southern
Complex. Each complex has a single first generation producer, also known as
the &#147;raw materials center&#148; operated by the Company, PQU and Copesul,
respectively, and several second generation producers that purchase feedstock
from the raw materials center.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Northeastern Complex began operations in 1978. The Northeastern
Complex consists of 28 second generation producers situated around the Company,
as the raw materials center for this Complex. As of December&nbsp;31, 2002, the
Company had an annual ethylene production capacity of 1,200,000 tons and in
2002 accounted for approximately 42% of Brazil&#146;s installed ethylene production
capacity.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The S&#227;o Paulo Complex began operations in 1968 and is the oldest
petrochemical complex in Brazil. PQU, the operator of its raw materials
center, supplies first generation petrochemicals to 11 second generation
producers, including the Company. As of December&nbsp;31, 2002, PQU had an annual
ethylene production capacity of 500,000 tons.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Southern Complex began operations in 1982. Copesul, the operator of
this Complex&#146;s raw materials center, supplies first generation petrochemicals
to six second generation producers, including the Company. As of December&nbsp;31,
2002, Copesul had an annual ethylene production capacity of 1,135,000 tons.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A fourth petrochemical complex is being constructed in the State of Rio de
Janeiro. Rio Pol&#237;meros, a Brazilian petrochemical company, will serve as the
cracker for the new complex and is constructing a petrochemical plant in Duque
de Caxias, Rio de Janeiro, with an annual capacity to produce 520,000 tons of
ethylene, 75,000 tons of propylene and 540,000 tons of linear low density
polyethylene and high density polyethylene. This plant will use natural gas as
a feedstock and has announced that it expects to commence operations in June
2004.
</FONT>
<P align="left"><FONT size="2"><B><I>Role of the Brazilian Government</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The current structure of the petrochemical industry reflects the Brazilian
government&#146;s plan, developed during the 1970s, to establish a domestic
petrochemical industry to serve Brazilian markets. First and second generation
producers, such as Braskem, are located within close proximity of each other to
allow the common use of facilities, such as utilities, and to facilitate
feedstock delivery. Prior to their respective privatization, production
capacity expansions at the crackers and the second generation producers were
coordinated to ensure that the supply of petrochemicals met demand. During
this period, the infrastructure that developed around or near the complexes
further fostered the interdependence of first and second generation producers,
as limited facilities were constructed to facilitate the transportation and
storage of feedstocks for import or export.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Brazilian government developed the Brazilian petrochemical industry by
promoting the formation of tripartite joint ventures among the Brazilian
government, foreign petrochemical companies and private Brazilian investors.
Petrobras&#146;s majority-owned subsidiary, Petroquisa, participated in each joint
venture as the representative of the Brazilian Government; a foreign petrochemical company provided technology
and a Brazilian private sector company provided management.
</FONT>

<P align="center"><FONT size="2">21</FONT>




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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 1992, the Brazilian government began a privatization program to reduce
significantly its interests in, and influence over, the petrochemical industry,
particularly with respect to first and second generation producers. This
program was designed to increase private investment in the petrochemical
industry and to spur its consolidation and rationalization. As a result of
privatization auctions, the Brazilian Government&#146;s ownership of the voting
stock of Braskem, Copesul and PQU was significantly reduced, and the private
ownership of the second generation producers, through the private groups that participate in the voting stock
of the crackers, increased. These privatizations also fostered the development
of the Company and the vertical integration of its operations.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the percentage of the indirect interests
held in the crackers&#146; voting stock before the privatization of each of them and
as at December&nbsp;31, 2002.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="22%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Before privatization</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>As at December 31, 2002</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Date of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Private</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Private</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>privatization</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Government</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Groups</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Others(1)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Government</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Groups</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Others (1)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Copesul</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">May 15, 1992</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">67.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">30.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">52.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">31.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PQU</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Jan. 24, 1994</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">67.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">31.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">62.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Braskem (2)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Aug. 15, 1995</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">48.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">50.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">79.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(1)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Pension funds, banks and employees.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(2)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The decrease in government ownership of the Company&#146;s capital stock also
reflects the merger of Copene (which was partially state-owned) with OPP,
Nitrocarbono and Proppet (which were majority-owned by private groups).</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><B><I>Role of Petrobras</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Until recently, Brazil&#146;s Constitution granted the Brazilian government a
monopoly, exercised through Petrobras, over the research, exploration,
production, refining, importing, and transporting of crude oil and refined
petroleum products (excluding petrochemical products) in Brazil. The Brazilian
Constitution also provided that by-products of the refining process, such as
naphtha, could only be supplied in Brazil by or through Petrobras. Naphtha is
the feedstock used in Brazil for the production of basic petrochemicals such as
ethylene and propylene. Since 1995, the Brazilian government has taken several
measures to deregulate the petrochemical industry in Brazil. With the creation
of the <I>Ag&#234;ncia Nacional de Petr&#243;leo </I>(the National Petroleum Agency, or ANP), in
1997, new rules and regulations have been implemented, aimed at gradually
liberalizing Petrobras&#146;s monopoly. Since 2000, several first generation
producers, including Braskem, have imported naphtha from trading companies and
oil and gas producers abroad.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Petrobras produced and sold approximately 80% of the naphtha consumed in
Brazil in 2002. Braskem and Copesul collectively imported the remaining 20% of
naphtha consumed in Brazil in 2002.
</FONT>
<P align="left"><FONT size="2"><B><I>Tariffs</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company sets prices for ethylene, its principal first generation
petrochemical product, using a margin sharing system. Prices paid for imported
first generation products are based on international market prices, taking into
account transportation and tariff costs. The prices charged by first
generation producers are based on similar factors. Tariff rates imposed by the
Brazilian Government on petrochemical imports have varied over time. See
&#147;&#151;Overview of the Company&#146;s Operations&#151;The Basic Petrochemicals Unit&#151;Sales and
Marketing of Basic Petrochemical Products.&#148; The price of ethylene by-products,
such as butadiene, is set by reference to several market factors, including the
prices paid by second generation producers for imported products.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Second generation producers, including the Company, generally set prices
for their products by reference to several market factors, including the prices
paid by third generation producers for imported products. Prices paid for such
imports are based in part on transportation and tariff costs. Consequently,
the prices charged by the second generation producers are affected by tariff
rates imposed by the Brazilian government on petrochemical imports.
In the past, the Brazilian government has frequently used import and export tariffs to
effect economic policies, with the consequence that tariffs generally, and
those imposed on petrochemical products in particular, have varied
significantly. In November 1997, for example, the import tariffs for
polyethylene, polypropylene and PVC were increased from 14% to 17%, but were
subsequently reduced to 15.5% on January&nbsp;1, 2002. On January&nbsp;1, 2002, the
import tariff for caustic soda was reduced from 10.5% to 9.5%. As of December
31, 2002, the import tariffs for basic petrochemical products ranged between
3.5% and 5.5% (except for caustic soda) and the import tariffs for second
generation petrochemical products ranged between 3.5% and 15.5%. Imports and
exports within the Mercosul countries have not been subject to tariffs since
December 2001.
</FONT>
<P align="center"><FONT size="2">22</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows the fluctuation of the tariffs on basic
petrochemicals and second generation petrochemicals after 1993. The tariff
rates shown are those applicable at the end of the respective years.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="95%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002<SUP>(1)</SUP></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001<SUP>(2)</SUP></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1999</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1998</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1997<SUP>(3)</SUP></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1996</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1995</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1994</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1993</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>(%)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Basic petrochemicals</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Ethylene</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Propylene</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Butadiene</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Toluene</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Benzene</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Ortho-xylene</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Para-xylene</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Caustic soda</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD nowrap><FONT size="2">(5)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Second generation
petrochemicals</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">TDI</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14</FONT></TD>
    <TD nowrap><FONT size="2">(6)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">EDC</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10</FONT></TD>
    <TD nowrap><FONT size="2">(7)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">LAB</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14</FONT></TD>
    <TD nowrap><FONT size="2">(8)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD nowrap><FONT size="2">(12)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Ethylene oxide</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Propylene oxide</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">HDPE</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD nowrap><FONT size="2">(9)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">LDPE</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD nowrap><FONT size="2">(9)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">LLDPE</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD nowrap><FONT size="2">(9)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Polypropylene</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD nowrap><FONT size="2">(9)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Polystyrene</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD nowrap><FONT size="2">(9)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PVC</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD nowrap><FONT size="2">(9)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Styrene</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD nowrap><FONT size="2">(10)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Acrylonitrile</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8</FONT></TD>
    <TD nowrap><FONT size="2">(4)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD nowrap><FONT size="2">(11)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">DMT</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8</FONT></TD>
    <TD nowrap><FONT size="2">(4)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD nowrap><FONT size="2">(11)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Caprolactam</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8</FONT></TD>
    <TD nowrap><FONT size="2">(4)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD nowrap><FONT size="2">(11)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In 2002, the official tariff was 1.5% less than the rate stated above.
An additional surcharge of 1.5% was assessed, which is included in the
rate shown.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In 2001, the official tariff was 2.5% less than the rate stated above.
An additional surcharge of 2.5% was assessed, which included in the rate
shown.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(3)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">An additional tariff of 3% was assessed commencing on November&nbsp;13, 1997,
which included in the rate shown.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(4)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">4% until April&nbsp;27, 1995; 8% after that date.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(5)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">5% applied until March&nbsp;1, 1994; 8% applied from March&nbsp;1, 1994 through
October&nbsp;1, 1994; 0% from October&nbsp;4, 1994.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(6)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">15% applied until September&nbsp;22, 1994; 14% after that date.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(7)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">15% applied until September&nbsp;22, 1994; 10% after that date.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(8)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">15% applied until September&nbsp;25, 1994; 14% after that date.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(9)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">15% applied until September&nbsp;25, 1994; 14% after that date; 2% from
November&nbsp;24, 1994.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(10)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">10% applied until November&nbsp;11, 1994; 2% after that date.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(11)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">15% applied until September&nbsp;22, 1994; 14% after that date; 2% from
November&nbsp;24, 1994.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(12)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">20% applied until July&nbsp;1, 1993; 15% after that date.</FONT></TD>
</TR>
</TABLE>

<P align="left"><FONT size="2"><I>Source: </I>ABIQUIM &#151; <I>Associa&#231;&#227;o Brasileira da Ind&#250;stria Qu&#237;mica </I>(the Brazilian
Chemical Industry Association, or ABIQUIM).
</FONT>

<P align="center"><FONT size="2">23</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2"><B>Operating Environment</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Brazilian markets in which the Company competes are cyclical that are
sensitive to relative changes in supply and demand, which in turn, are affected
by general economic conditions in Brazil and other countries in the Mercosul
free trade area, particularly Argentina. The Brazilian markets are also
affected by the cyclical nature of international markets because prices in
Brazil are determined in part by reference to world petrochemical prices and
prices paid by importers of petrochemicals products. Reductions in
tariffs and other trade barriers have increasingly exposed the Brazilian
petrochemical industry to the cyclicality of the international markets.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Traditionally, the second and third quarters have been the periods of the
year with the highest sales for the petrochemical industry in the Brazilian
market. The increase during this six-month period is tied in part to
production of consumer goods to be sold during the end of the year holiday
season.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With the growth of Brazilian GDP of approximately 1.5% in 2002 compared to
1.4% in 2001, the domestic demand in the three principal petrochemical markets
&#150; thermoplastics, elastomers and synthetic fibers &#150; increased by approximately
2.6% compared to 2001. During 2002, imports of thermoplastics registered
moderate growth of 1.7%. Although imports represent a small percentage of
overall Brazilian petrochemical consumption, polyolefins and PVC imports grew
by 11.0% and 9.8%, respectively, during 2002, while imports of PET and
polystyrene decreased by 18.9% and 35.2%, respectively. The increase in
polyolefins and PVC imports was in part linked to the economic crisis in
Argentina, where producers of these products attempted to sell their excess
capacity to Brazil in light of depressed demand for polyolefins and PVC in
Argentina. PET and polystyrene imports decreased in line with cyclical
patterns in those markets.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company anticipates that demand for its products in Brazil will
continue to grow due to increasing consumption of plastic-based products,
population growth, improvements in per capita income and general economic
growth in Brazil. In addition, despite the high growth rates for domestic
consumption, Brazilian per capita consumption of second generation
petrochemicals has been modest compared to per capita consumption in other
countries, which the Company believes suggests a potential for future growth in
Brazil.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information relating to the Company&#146;s
production, the estimated production of other Brazilian companies and exports
of olefins and aromatics for the years indicated.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="23%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Production</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Estimated</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>of Other</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Company</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Brazilian</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Domestic</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Production</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Production</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Companies</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Imports</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Exports</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Consumption</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="7"><FONT size="1"><B>(in thousands of tons)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Olefins (1)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2002</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,847.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,591.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,256.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">N.A. </FONT></TD>
    <TD nowrap><FONT size="2">(5)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">N.A</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">N.A.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2001</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,077.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,705.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,372.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">29.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">108.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,998.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2000</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,309.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,790.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,519.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">93.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,218.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Aromatics(2)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2002</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,541.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">666.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">874.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">N.A</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">N.A.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">N.A.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2001</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,282.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">698.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">584.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">110.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">283.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,110.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2000</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,349.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">712.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">636.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">78.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">372.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,055.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Polyolefins(3)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2002</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,623.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,064.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,558.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">335.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">492.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,466.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2001</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,557.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,031.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,526.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">302.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">487.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,371.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2000</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,719.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,160.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,558.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">256.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">605.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,370.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">24</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="23%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Production</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Estimated</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>of Other</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Company</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Brazilian</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Domestic</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Production</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Production</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Companies</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Imports</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Exports</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Consumption</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="7"><FONT size="1"><B>(in thousands of tons)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Vinyls(4)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2002</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">602.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">401.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">200.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">141.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">55.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">688.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2001</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">538.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">363.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">174.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">129.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">46.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">620.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2000</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">648.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">448.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">199.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">117.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">34.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">731.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PET</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2002</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">332.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">59.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">273.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">147.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">55.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">423.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2001</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">329.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">56.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">272.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">181.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">28.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">482.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2000</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">333.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">55.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">278.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">133.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">47.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">418.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Caprolactam</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2002</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">57.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">57.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">52.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2001</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">48.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">48.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">47.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2000</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">56.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">56.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">54.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Includes ethylene, propylene and butadiene.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Includes benzene, toluene, xylenes and C9 solvent.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(3)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Includes polyethylene, high density polyethylene, low density
polyethylene, linear low density polyethylene and polypropylene.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(4)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Suspension and emulsion PVC.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(5)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">N.A. means not available.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="100%" align="left" colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Source: Olefins and Aromatics: <I>Associaci&#243;n de Petroqu&#237;micos de Latino Am&#233;rica</I>
(Latin American Petrochemical Association) and Braskem; Polyolefins,
Vinyls, PET and Caprolactam: ABIQUIM and Braskem.</FONT></DIV></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The above estimates of total domestic consumption assume that all domestic
production is immediately sold in the market and that there has been no change
in total domestic inventory. Basic petrochemical producers are designed to
operate with low inventories of products and low inventory storage capacities
(the Company&#146;s average storage time is approximately 20&nbsp;days for finished goods
and six days for naphtha).
</FONT>
<P align="left"><FONT size="2"><B>Overview of the Company&#146;s Operations</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is the largest petrochemical company in Latin America and one
of the five largest Brazilian industrial companies, based on net revenues. The
Company has a diversified portfolio of chemical products, large competitive
scale and a strategic focus on thermoplastics. The Company is the only
Brazilian company with integrated first and second generation petrochemical
production facilities. The Company also sells electricity and other utilities
and services to unaffiliated customers.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is the result of a corporate restructuring process that
integrated the operations of six Brazilian petrochemical companies: Copene; OPP
Qu&#237;mica; Polialden; Trikem; Proppet; and Nitrocarbono. The Company&#146;s business
operations are organized into four business units, corresponding to its
principal products, production processes and markets:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Basic Petrochemicals (reflecting the operations of Copene, the Company&#146;s predecessor);</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Polyolefins (reflecting the
operations of OPP Qu&#237;mica and Polialden);</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Vinyls (reflecting the operations of Trikem); and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Business Development (reflecting the operations of Nitrocarbono and
Proppet and management of certain of the Company&#146;s other minority
investments).</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">25</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The integration of the operations of the six Brazilian petrochemical
companies that formed the Company has resulted in and, the Company believes
will continue to yield substantial savings and synergies, including, without
limitation, in respect of taxes, procurement and logistics expenses, selling,
general and administrative expenses and other operating expenses.
</FONT>
<P align="left"><FONT size="2"><B>Business Strategy</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s strategy is to continue to (1)&nbsp;increase and strengthen the
leading market positions of its second generation businesses in Brazil and
Latin America and (2)&nbsp;improve its cost competitiveness through vertical
integration (<I>e.g.</I>, by producing ethylene and propylene, the principal raw
materials for its second generation polyolefins products). The key elements of
this strategy are as follows:
</FONT>
<P align="left"><FONT size="2"><B><I>Increase Focus on Customer Relationships</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is focusing on further improving customer service and
developing closer, longer-term relationships with its customers. Recognizing
the cyclical nature of the markets for its petrochemical products, the Company
believes that by focusing on customer relationships it can strengthen customer
loyalty during periods of lower demand for its products. The Company&#146;s sales
growth strategy is based on:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">increasing the consumption of its current clients, including
through the development of new applications focused on replacing
non-plastic materials and other thermoplastics with plastics. To assist
the Company in this effort, Braskem maintains technology, innovation
and application facilities that seek to (1)&nbsp;optimize the ease with
which its clients process its products, (2)&nbsp;identify new product market
opportunities, (3)&nbsp;increase existing capacity, (4)&nbsp;reduce operating
costs and (5)&nbsp;upgrade and optimize product technology in order to
develop new products in response to its customers&#146; requirements. The
Company also maintains pilot plants to accelerate the time-to-market of
its new products;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">increasing the volume of exports; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">entering into additional long-term supply contracts with existing and new clients.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><B><I>Pursue Selected Growth Opportunities</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is constantly in search of growth opportunities in the markets
in which it competes or in related markets. For instance, the development of
UTEC&#153;, the Company&#146;s ultra-light molecular weight polyethylene, has given the
Company a new product line with market potential and profitability. Developed
from one of the Company&#146;s high density polyethylene units in Bahia, UTEC&#153; is a
polymer for technical applications due to its superior mechanical properties.
UTEC&#153; has been mainly sold in the United States. The Company&#146;s production and
sale of automotive gasoline is another example of a selected growth opportunity
that the Company has pursued. The automotive gasoline produced by its Basic
Petrochemicals Unit is of extremely high quality, which has allowed the Company
to compete to a limited extent in the Northeast of Brazil and to export its
gasoline to the United States.
</FONT>
<P align="left"><FONT size="2"><B><I>Expand the Company&#146;s Production Capacity</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company plans to expand progressively the production capacity of its
business units over the next three to five years based on expected demand
growth for its products. Expansion will be primarily achieved through
efficiency enhancements at its plants and through modernizing production
technology. The Company believes that this additional production capacity will
help it to maintain its leadership position in the Brazilian markets in which
it competes, as well as support its expansion into strategic export markets.
</FONT>
<P align="left"><FONT size="2"><B><I>Continue to Reduce Operating Costs and Increase Operating Efficiencies</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In part as a result of its vertical integration, the Company is a low-cost
producer of first and second generation petrochemicals. The Company has an
ongoing program to increase operating efficiencies and to reduce
operating costs, while capturing all potential synergies from the mergers that resulted
in the formation of the Company. Since its consolidation in August 2002
through the mergers described in &#147;History and Development of the Company,&#148; the
Company has decreased the overall number of its employees by approximately 13%,
while at the same time increasing its production. In order to capture
potential synergies from the mergers, the Company has assigned a
team to monitor the development of all of its post-merger initiatives and
to report frequently to its management to assure that adequate resources are
promptly made available and efficiently used.
</FONT>
<P align="center"><FONT size="2">26</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company believes that securing its feedstock at competitive prices is
an important part of its cost control and reduction program. Although its
basic petrochemicals plants are capable of using naphtha, natural gas
condensates or, to a limited extent, natural gas, as feedstocks, the Company
uses naphtha almost exclusively. Naphtha is the most significant direct cost
associated with the Company&#146;s production of basic petrochemicals. Naphtha,
including naphtha purchased by the Company&#146;s Basic Petrochemicals Unit and
naphtha used to produce the ethylene purchased by the Company&#146;s Polyolefins
Unit from Copesul, accounted for approximately 66% of its total cost of sales
in 2002. Since the deregulation of the monopoly of Petrobras over the supply
of naphtha and other petroleum refined products, the Company began to import
naphtha, and during the year ended December&nbsp;31, 2002, the Company purchased
approximately 30% of its feedstock requirements through imported naphtha and
natural gas condensate, primarily from suppliers located in Africa.
</FONT>
<P align="left"><FONT size="2"><B>The Basic Petrochemicals Unit</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s Basic Petrochemicals Unit is comprised of the historical
operations of Copene, the Company&#146;s predecessor. Prior to the Nova Cama&#231;ari
Acquisition on July&nbsp;25, 2001, the operations of the Basic Petrochemicals Unit
comprised all of the Company&#146;s operations. Financial information with respect
to the Basic Petrochemicals Unit that is contained in this section is based on
the historical results of the Company prepared in accordance with Brazilian
Corporate Law. See &#147;&#151;History and Development of the Company&#148; and &#147;Item&nbsp;5.
Operating and Financial Review and Prospects&#151;The Auction, the Nova Cama&#231;ari
Acquisition and the Related Party Mergers.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s basic petrochemicals operations are conducted in five major
units (Olefins 1, Olefins 2, Aromatics 1, Aromatics 2 and Energy and Services)
and various plants located at the Northeastern Complex. The Northeastern
Complex is located:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">36 kilometers from the Madre de Deus Port Terminal, a port terminal
which is owned and operated by Petrobras;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">27 kilometers from <I>Refinaria Landulfo Alves Mataripe </I>(&#147;RLAM&#148;), one
of the largest refineries in Brazil, which is owned and operated by
Petrobras; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">22 kilometers from the port terminal of Aratu, which is operated by
Terminal Qu&#237;mico de Aratu S.A. &#150; TEQUIMAR, a subsidiary of Ultrapar
Participa&#231;&#245;es S.A.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company uses the Madre de Deus Port Terminal to unload naphtha
imported by Petrobras or that comes from other Petrobras refineries located
outside the State of Bahia. A pipeline owned by Petrobras transports naphtha
from the Madre de Deus Terminal toward RLAM where it interconnects with RLAM&#146;s
naphtha pipeline system. RLAM&#146;s naphtha pipeline system interconnects with the
pipeline system of the port of Aratu, through which naphtha and natural gas
condensate, a stream from natural gas fields that is similar to a
naphtha-diesel blend, are transported to the Company&#146;s basic petrochemicals
plants.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A 477 kilometer ethylene pipeline connects the Company&#146;s basic
petrochemicals units and plants to its chlorochemical complex in the State of
Alagoas at which Braskem&#146;s Vinyls Unit uses ethylene as a raw material in
producing PVC and other products. See &#147;&#151;Overview of the Company&#146;s
Operations&#151;Vinyls Unit.&#148; In addition, the Northeastern Complex is serviced by
a well-developed road and rail network, facilitating the transportation of
petrochemicals to other regions of Brazil.
</FONT>
<P align="center"><FONT size="2">27</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s basic petrochemicals plants produce two principal types of
petrochemicals: olefins and aromatics. During the year ended December&nbsp;31,
2002, approximately 30.2% of Braskem&#146;s olefin production and 12.6% of the
Company&#146;s aromatics production were consumed by the Company or sold to related
parties, some of which have since merged with and into Braskem, for use in the
production of second generation petrochemical products. See &#147;Item&nbsp;7. Major
Shareholders and Related Party Transactions&#151;Related Party Transactions.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s Basic Petrochemicals Unit also:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">produces automotive gasoline, LPG and Solvent C9;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">supplies steam, water, compressed air and electric power to other
plants in the Northeastern Complex; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">renders services to the operators of other plants in the
Northeastern Complex.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><B><I>Products of the Basic Petrochemicals Unit</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following chart shows the major products produced by the Basic
Petrochemicals Unit, their derivative intermediate products and their most
common end uses.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="95%">
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="36%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left"><FONT size="1"><B>Braskem&#146;s products</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="left"><FONT size="1"><B>Intermediate products</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="left"><FONT size="1"><B>Most common end uses</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B><u>Olefins</u></B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Ethylene</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Low density/linear low density<BR>
polyethylene (2)
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Garbage bags, packaging film, toys,<BR>
housewares, electrical insulation,<BR>
paper coatings</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
High-density polyethylene (2)
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Blow-molded plastic bottles (such<BR>
as milk bottles)</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Ethylene oxide, used to produce
ethylene glycol
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Polyester fibers and PET resin</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Ethylene dichloride, used to produce
polyvinyl chloride (1)
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Pipes, home siding, upholstery,<BR>
floor coverings</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Ethylbenzene, used to produce SM
and then PS
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Disposable cups and containers,
high-impact plastics</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Propylene (polymer and
chemical grade)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Polypropylene (2)
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Carpet-backing, luggage, bottles,<BR>
diapers, raffia bags</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Acrylonitrile
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Clothing, plastics</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Propylene oxide
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Polyurethane foams for furniture
and insulation, cleaning compounds
and coatings</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Oxo alcohol
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Plasticizers</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Butadiene</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Synthetic rubber, elastomers, resins
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Tires, shoes, hoses, surgical gloves</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Butene-1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Linear low density polyethylene (2)
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Garbage bags, packaging film, toys,<BR>
housewares, electrical insulation,<BR>
paper coatings</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B><u>Aromatics</u></B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Benzene</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Ethylbenzene (used to make styrene
monomer/polysterene)
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Disposable cups, containers,<BR>
high-impact plastics</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Cumene
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Epoxies</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Cyclohexane (3)
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Nylon</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">28</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="95%">
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="36%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left"><FONT size="1"><B>Braskem&#146;s products</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="left"><FONT size="1"><B>Intermediate products</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="left"><FONT size="1"><B>Most common end uses</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Linear Alkyle Benzene
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Detergents</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Isoprene</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Styrene-isoprene-styrene (SIS)
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Adhesive</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Toluene</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Toluenediisocianate (TDI)
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Urethane foams</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Solvents</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Para-xylene</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Purified terephtahlic acid and
Dimethyl terephthalate (DMT) (3)
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Polyester film and fibers, PET
resin (3)</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Ortho-xylene</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Phthalic anhydride and plasticizers
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Flexible products from PVC</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B><u>Others</u></B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">MTBE</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Octane booster for gasoline</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Solvent C9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Solvents and thinners</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Pyrolysis C9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Octane booster for gasoline</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B><u>Fuels</u></B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Automotive Gasoline</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Fuel for internal-combustion engines</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">LPG</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Cooking gas</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(1)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Produced by the Vinyls Unit. See &#147;&#151;Overview of the Company&#146;s
Operations&#151;The Vinyls Unit.&#148;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(2)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Produced by the Polyolefins Unit. See &#147;&#151;Overview of the Company&#146;s
Operations&#151;The Polyolefins Unit.&#148;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(3)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Produced by the Business Development Unit. See &#147;&#151;Overview of the
Company&#146;s Operations&#151;The Business Development Unit.&#148;</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Olefins.</u> Polymer grade ethylene and propylene, known as monomers, are the
Company&#146;s primary olefins products and are building blocks for many types of
plastics and resins. Ethylene and propylene serve as the chemical &#147;backbone&#148;
for many consumer products. Different combinations of monomers are polymerized
or linked together to form polymers or plastic resins, with varying properties
and characteristics.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The production of olefins involves the heating, compression, cooling and
separation of the streams that are generated from naphtha, natural gas or
gasoil under controlled temperature and pressure conditions. The Company&#146;s
Basic Petrochemicals Unit uses naphtha as its primary basic petrochemical
feedstock. The Company&#146;s production of olefins begins with &#147;cracking,&#148; a
conversion process by which naphtha is heated in furnaces causing long-chain
naphtha molecules to split into short chain molecules or to transform into
other molecules in gaseous form. The gases produced are cooled, and then, a
distillation process separates the heaviest materials (pyrolysis residue,
pyrolysis gas oil and pyrolysis gasoline) from the lighter gases. The
pyrolysis gasoline, after a hydrogenation process, is sent to the aromatics
extraction unit where it is used as feedstock in the production of aromatics.
The remaining gases are further cooled and compressed. The resulting products
are then sent to the Company&#146;s fractionation and purification unit where they
are distilled for the recovery of high purity ethylene and propylene. High
purity butadiene is obtained following cryogenic fractionation in the butadiene
recovery unit. MTBE is produced by processing the remaining material from the
butadiene recovery unit with methanol.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Aromatics.</u>
Naphtha is also used as feedstock for the production of
aromatics. The production of aromatics, known as &#147;catalytic reformation,&#148;
involves inducing a chemical reaction by pumping the naphtha through reactors
under controlled temperature and pressure conditions in the presence of
chemical catalysts. The catalytic reformation unit produces two aromatic
streams: light aromatic stream and heavy aromatic stream. The light aromatic
stream moves to the aromatics extraction unit where, together with the
pyrolysis gasoline produced during the olefin production process and in the
presence of special solvents, an aromatic mixture called BTX extract is
produced. BTX extract is then separated in the aromatics fractionation unit to
yield high purity benzene, toluene and xylenes. The xylenes stream is
subjected to separation and isomerization together with the &#147;heavy aromatic
stream&#148; from the catalytic reformation unit to produce para-xylene,
ortho-xylene, mixed xylenes and Solvent C9. Processing of the toluene stream
in the toluene transalkylation unit can vary the amount of benzene, toluene and
xylenes.
</FONT>
<P align="center"><FONT size="2">29</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Fuels.</u> As by-products of its production of basic petrochemicals, the
Basic Petrochemicals Unit also produces gasoline and LPG. The Company has been
authorized by the ANP to produce and sell automotive gasoline and LPG in the
domestic and international markets since August&nbsp;15, 2000 and October&nbsp;2, 2001,
respectively. The Company expects to be authorized by ANP to produce and sell
diesel fuel.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Utilities.</u> As by-products of its production of basic petrochemicals, the
Company also produces electric power, steam, compressed air and drinking and
demineralized water (together, &#147;Utilities&#148;), which are used in the Company&#146;s
own production process, including those of the Polyolefins Unit and the Vinyls
Unit, and are also sold to approximately 40 companies in the Northeastern
Complex. The Company&#146;s Utilities facilities consist of units for
thermoelectric power generation, water trapping and adduction, water treatment,
and the production of steam and compressed air.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Braskem generates an average of approximately 50% of the Northeastern
Complex&#146;s electricity consumption requirements, and CHESF-Companhia
Hidroel&#233;trica do S&#227;o Francisco (&#147;CHESF&#148;), an electric power generation company
located in the State of Bahia and serving the States of Alagoas and Bahia,
furnishes the remainder.
</FONT>

<P align="left"><FONT size="2"><B><I>Production Capacity of the Basic Petrochemicals Unit</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The table below sets forth the location, main products, production
capacity and tons produced for the periods presented for the Company&#146;s basic
petrochemicals units and plants.
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="38%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Production</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Main</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Production</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Year Ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Name</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Products</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Capacity</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(in tons)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>(in tons)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">Olefins Units 1 and 2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Ethylene
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">1,200,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">989,276</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">1,069,724</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Propylene
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">548,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">464,521</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">491,957</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">Plants of Aromatics Units 1 and
2 (1):</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Butadiene Plants 1 and 2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Butadiene
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">170,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">137,976</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">143,700</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">MTBE Plants 1 and 2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
MTBE
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">156,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">106,449</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">108,251</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">1-Butene Plant</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
1-Butene
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">31,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">20,530</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&#151;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">Isoprene Plant</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Isoprene</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">18,000
</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">16,380
</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&#151;
</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Dicyclopentadiene (2)
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">19,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">19,799</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">18,897</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">Sulfolane Plants 1, 2 and 3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Coperaf-1 (3)
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">120,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">116,575</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">102,848</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">BTX Fractionation Plants 1 and 2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Benzene</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">370,000
</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">318,373
</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">317,223
</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Toluene (2)
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
75,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
129,200</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
173,960</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">C8&#043; Fractionation Plant</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Mixed Xylenes (2)
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">40,000
</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">62,679
</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">50,137
</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Ortho-Xylene
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
60,000
</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
48,135
</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
46,001
</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Solvent C9 (3)
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
24,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
6,803</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
3,455</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">Parex Plant</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Para-Xylene
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">150,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">101,426</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">107,321</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Blending Plant</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Motor Gasoline (4)
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">600,000
</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">326,493
</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">351,806
</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Liquified Petroleum Gas (4)
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
60,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
30,780</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
4,553</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(1)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The Company&#146;s Basic Petrochemical Unit defines the term &#147;unit&#148; to mean
several plants that are linked together in order to produce other olefins
or aromatics. Accordingly, the production capacity of Aromatics Units 1
and 2 is the sum of the production capacities of the various plants that
form part of the units.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(2)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Actual production may exceed production capacity of certain plants when
excess capacity is available in and borrowed from other plants in the
Aromatics Units.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(3)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Solvents.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(4)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Motor gasoline and liquified petroleum gas production in cubic meters per
year.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has two olefins units that produce ethylene and propylene. An
olefins unit is divided into three sections: the hot section; the compression
section; and the cold section. The hot section comprises the
pyrolysis heaters, which are the thermo-reactors in which the liquid naphtha is
evaporated in the convection section and is cracked in the radiation section.
The effluent from the heaters goes to the hot section fractionation plant where
the gases are separated from the pyrolysis gasoline and pyrolysis residue. The
gases from the hot section go to the charge gas compressor, where they are
compressed and sent to the cold section. In the cold section, the compressed
gas is fractionated into many components, such as methane, hydrogen, ethylene,
propylene, C-4 stream and pyrolysis gasoline. The cold section also contains
propylene and ethylene compressors, used as the main equipment for two auxiliary
systems to refrigerate other equipment.
</FONT>
<P align="center"><FONT size="2">30</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The first olefin plant commenced operations in 1978. This plant uses ABB
Lummus Global technology and had an original annual capacity of 388,000 tons
and 200,000 tons of ethylene and propylene, respectively. The Company is in
the process of its third debottlenecking process at this plant, which will
result in nominal annual capacity of 545,000 tons of ethylene and 258,000 tons
of propylene, by the end of 2003. The second olefin plant commenced operation
in 1992. This plant uses technology developed jointly by CENPES (Petrobras
Research Center) and ABB Lummus Global for the hot section and technology
developed by TECHNIP (a major French ethylene technology licensor) for the
compression and cold sections of the plant. This plant had an original annual
capacity of 450,000 tons and 290,000 tons of ethylene and polypropylene,
respectively. However, the Company has increased its capacity to 655,000 tons
of ethylene.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is completing an improvement of the Olefins 1 unit in 2002
that will increase the installed capacity of the unit and modernize and upgrade
the technology of the unit. The Company shut down the pyrolysis plant that is
part of the Olefins 1 unit for 92&nbsp;days in 2002 for regular maintenance and
expansion, resulting in reduced overall ethylene and propylene production
during that year. The cost of these improvements in 2002 was approximately
U.S.$61&nbsp;million.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has two butadiene plants that receive the C4 stream from its
olefins plants and separate butadiene as a main stream through an extraction
process, using DMF as a solvent. The secondary stream is called raffinate 1
and serves as feedstock for the MTBE unit. The Company&#146;s first butadiene unit
commenced operation in 1978 and uses Nippon Zeon technology. The Company&#146;s
second butadiene unit commenced operation in 1992 and uses technology developed
by the Company&#146;s predecessor, Copene.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has two MTBE plants. The iso-butene from the raffinate 1
stream produced by the Company&#146;s butadiene plants and from methanol, purchased
from third parties, react to produce MTBE as a main stream and raffinate 2 as a
secondary stream. The Company&#146;s first MTBE plant commenced operations in 1987,
and its second MTBE plant commenced operations in 1992. Both plants use
Petroflex technology.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has one 1-butene plant that receives the raffinate 2 stream
from the Company&#146;s MTBE plants and subjects it to a super-fractionation process
in which 1-butene is the main stream and raffinate 3 is the secondary stream
that can be used in the production of liquified petroleum gas. The Company&#146;s
1-butene plant commenced operation in 1992 and uses technology developed by
Braskem&#146;s predecessor, Copene.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has two DPG plants that receive the pyrolysis gasoline from
the Company&#146;s olefins plants and separate the C5 stream from the pyrolysis
gasoline before it goes to the hydrogenation reactors and the Company&#146;s
isoprene unit or sulfolane plant. In the DPG plants, the pyrolysis gasoline
stream goes to the first hydrogenation reactor where C5 (if any) is
fractionated from mono-hydrogenated gasoline, which goes to the second
hydrogenation reactor. The product of the second reactor is a stream rich in
BTX (benzene, toluene and xylenes).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s first DPG plant commenced operations in 1978 and uses ABB
Global Lummus technology. The Company&#146;s second DPG plant commenced operations
in 1992 and uses technology developed jointly by Copene and the French
Institute of Petroleum.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s has one isoprene plant that receives the dehydrogenated C5
stream from the Company&#146;s DPG units and performs a fractionation process that
produces isoprene as the main product and a secondary stream of C5 raffinate,
which can be used as feedstock for the pyrolysis heaters of the Company&#146;s
olefins plants or used in the production of automotive gasoline. The Company&#146;s isoprene plant commenced
operations in 1991 and uses technology developed by Japan Synthetic Rubber
Company.
</FONT>

<P align="center"><FONT size="2">31</FONT>




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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has three sulfolane plants that process the BTX stream from
the DPG plants or from the catalytic reformation plant. Two of Braskem&#146;s
sulfolane plants are used to extract BTX from gasoline produced in the second
hydrogenation reactor of the DPG plants. Their main product is the BTX
aromatic stream, and their secondary product is PGH raffinate, which is used in
gasoline production or sold in the solvent markets. The Company&#146;s third
sulfolane plant processes the BTX aromatic stream from the catalytic
reformation plant. Its main product is the BTX aromatic stream and its
secondary product is raffinate. The Company&#146;s first two sulfolane plants
commenced operations in 1978 and use technology developed by Universal Oil
Products (&#147;UOP&#148;). The Company&#146;s third sulfolane plant commenced operations in
1988 and uses technology developed by Braskem&#146;s predecessor, Copene.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has two BTX fractionation plants that receive BTX from the
sulfolane plants and fractionate it into benzene, toluene and C8&#043;. The first
BTX fractionation plant commenced operations in 1978 and uses UOP technology.
The second BTX fractionation plant commenced operations in 1988 and uses
technology developed by the Company&#146;s predecessor, Copene.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has one catalytic reformation plant that receives medium
naphtha from the naphtha fractionation plant. The catalytic reformation plant
uses five reactor systems, loaded with platinum (Pt) catalyst, that convert
non-aromatic products into aromatic products. Its main products are light
aromatic stream (BTX rich stream) and heavy aromatic stream (C8&#043; stream), which
are sent to the Company&#146;s sulfolane plants and the C8&#043; fractionation plant,
respectively.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has one naphtha fractionation plant that receives (1)&nbsp;full
range naphtha and produces medium naphtha that is sent to the Company&#146;s
catalytic reformation plant and (2)&nbsp;light and heavy naphtha that may be used as
feedstock for the Company&#146;s olefins plants or used in the blending plant for
gasoline production. This plant commenced operations in 1998 and uses
technology developed by the Company&#146;s predecessor, Copene.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has one C8&#043; fractionation plant that receives C8&#043; from the
catalytic reformation plant and the BTX fractionation plants, fractionates it
into xylenes and C9 stream, and sends the xylenes to the parex plant. It
commenced operations in 1998 and uses technology developed by the Company&#146;s
predecessor, Copene.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has one parex plant that separates para-xylene from the blend
of ortho-xylene, metha-xylene and para-xylene contained in the streams from the
C8&#043; fractionation unit by using molecular sieves. Braskem&#146;s parex plant
commenced operations in 1978 and uses UOP technology.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has one isomar plant that converts ortho- and metha-xylenes
into para-xylene through an isomarization process that uses special catalysts.
The Company&#146;s isomar unit commenced operations in 1978 and uses UOP technology.
Together with the parex plant and the C8&#043; fractionation plant, the isomar
plant forms the C8 loop system, a process cycle that yields para-xylene and
other xylenes.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Braskem also has a plant that uses a disproportionation process with
special catalysts to convert toluene into benzene and xylenes with a high
content of para-xylene. This plant commenced operations in 1998 and uses
technology licensed by Mobil.
</FONT>
<P align="left"><FONT size="2"><B><I>Maintenance of Basic Petrochemicals Unit Plants</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Until April 1998, maintenance services for the Company&#146;s basic
petrochemicals plants were carried out exclusively by CEMAN - Central de
Manuten&#231;&#227;o Ltda. (&#147;Ceman&#148;), a wholly owned subsidiary of the Company
specialized in industrial maintenance. Ceman also supplied personnel to the
Basic Petrochemicals Unit for day-to-day activities and for periodic
maintenance. However, in April 1998, the Company&#146;s predecessor, Copene,
decided to administer and perform part of its own maintenance services.
Accordingly, Copene hired 163 employees, formed its own maintenance team and
limited the scope of the maintenance contract with Ceman.
</FONT>
<P align="center"><FONT size="2">32</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Copene sold the assets of Ceman to Asea Brown Boveri Ltd. &#150; ABB in April
1999. Although the assets of Ceman were sold, the Company (as successor of
Copene) remains responsible for Ceman&#146;s liabilities for the period before 1999.
The Company has since entered into a new maintenance contract with ABB and has
entered into maintenance contracts with other service providers.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because the Company has two independent olefins plants, uninterrupted
production of ethylene and propylene may continue, even while maintenance
services are being performed. In addition, other brief stoppages of operations
that do not materially affect production output may take place, primarily for
maintenance purposes, catalyst regeneration and equipment cleaning. Regular
plant maintenance requires complete plant shutdowns from time to time, which
usually take approximately 30&nbsp;days to complete. Since commencing operations in
July 1978, the Company&#146;s largest Basic Petrochemicals plant has undergone seven
scheduled major maintenance shutdowns as part of the Company&#146;s regular
maintenance policy. The last general shutdown, in July and August 2001, was
carried out in the Company&#146;s first ethylene production unit and lasted 25&nbsp;days.
This shutdown permitted inspection and maintenance of this unit, which had
been operational for almost five years, and was intended to return the plant to
its optimum efficiency and capacity. The cost of servicing the unit was
approximately U.S.$15&nbsp;million (not including the value of lost production
during this shutdown). In 2002, the Company also shut down the pryolysis plant
that is part of its Olefins 1 Unit for 92&nbsp;days for scheduled maintenance and in
order to increase the installed capacity of the unit and to modernize and
upgrade the unit technologically. This shutdown resulted in reduced ethylene
and propylene by the Basic Petrochemicals Unit in 2002. The cost of these
improvements to the unit was approximately U.S.$61.0&nbsp;million. The next general
shutdown has been scheduled for the pyrolysis plant that is part of the Olefins
2 Unit, the smaller of the Company&#146;s two ethylene plants, in November 2003,
with an estimated duration of 25&nbsp;days and an estimated total cost of U.S.$14
million.
</FONT>
<P align="left"><FONT size="2"><B><I>Raw Materials of the Basic Petrochemicals Unit</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Naphtha, a crude oil-based product, represents the principal production
and operating cost of the Basic Petrochemicals Unit. The price of naphtha
varies primarily based on changes in the U.S. dollar-based international price
of crude oil.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Until recently, Petrobras exercised a monopoly over the research,
exploration, production, refining, importation and transportation of crude oil
and refined petroleum products in Brazil, including naphtha. In November 1995,
the Brazilian Congress approved an amendment to the Brazilian Constitution to
allow, among other activities, private sector entities in Brazil to conduct
certain activities that had been performed solely by Petrobras. On August&nbsp;6,
1997, the Brazilian Congress approved Law No.&nbsp;9,478, aimed at liberalizing
Petrobras&#146;s monopoly and fostering competition in the oil and gas business in
Brazil. This law created the ANP, which regulates oil-related activities in
Brazil. The ANP has implemented rules and regulations that are intended to
encourage the gradual liberalization of the Brazilian petroleum market.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On August&nbsp;9, 2000, the ANP ended Petrobras&#146;s monopoly over the supply of
naphtha in Brazil and implemented a policy of free naphtha price negotiation.
After two months of negotiations, the Brazilian basic petrochemicals producers
and Petrobras entered into a pricing agreement, and a pricing formula for
naphtha was established. According to this formula, the price of naphtha
supplied by Petrobras is linked to ARA quotations of naphtha&#146;s price and to the
U.S. dollar-<I>real </I>exchange rate. The price of naphtha in Brazil was U.S.$179.37
per ton in December 2001. The price increased significantly in 2002, reaching
a high of U.S.$268.95 per ton in November 2002, due primarily to the threat of
war between the United States and Iraq.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Both of Braskem&#146;s olefins plants currently use naphtha almost exclusively
as a feedstock, although both plants are capable of using natural gas, to a
limited extent, as a feedstock. Until the early 1980s, approximately 60% of
feedstock used by first generation producers in Brazil was gas oil and 40% was
naphtha, but the increased use of diesel fuel by trucks and buses in Brazil in
the 1980s reduced the supply of gasoil available to the first generation
producers. Currently, Braskem uses naphtha as its primary feedstock, and in
2002, naphtha accounted for approximately (1)&nbsp;90% of the Basic Petrochemical
Unit&#146;s total variable cost of sales and (2)&nbsp;66% of its total cost of sales,
including naphtha purchased by the Company&#146;s Basic Petrochemicals Unit and
naphtha used to produce the ethylene that the Company&#146;s Polyolefins Unit
purchases from Copesul. However, due to the high price of naphtha, the Company is preparing to process alternate raw materials such as
petroleum condensate, liquified petroleum gas and extra-light crude oil.

</FONT>
<P align="center"><FONT size="2">33</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows the ARA price of naphtha for the periods
indicated.
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Price of Naphtha</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="11"><FONT size="1"><B>(in U.S. dollars per ton)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Average</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">228.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">215.92</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">263.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Month ended</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">January</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">173.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">267.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">252.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">February</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">205.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">255.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">277.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">March</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">225.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">240.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">241.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">April</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">225.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">275.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">215.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">May</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">210.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">268.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">267.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">June</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">218.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">221.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">277.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">July</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">232.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">191.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">252.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">August</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">247.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">215.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">276.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">September</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">255.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">183.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">286.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">October</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">230.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">162.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">286.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">November</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">228.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">145.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">303.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">December</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">287.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">167.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">225.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of the deregulation of Petrobras&#146;s monopoly over the supply of
naphtha, Braskem made investments in an aggregate amount of approximately
U.S.$37&nbsp;million in its transportation infrastructure to enable the Port of
Aratu to receive shipments of imported naphtha. On December&nbsp;31, 2001, the
Basic Petrochemicals Unit received its first shipment of imported naphtha.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the years ended December&nbsp;31, 2002 and 2001, the Basic
Petrochemicals Unit purchased:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">2,778 thousand tons of naphtha, representing 72.4% of its naphtha
requirements, and 4,087 thousand tons representing 99.1% of its naphtha
requirements, respectively, from Petrobras; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">1,059 thousand tons of naphtha, representing 27.6% of its naphtha
requirements, and 35 thousand tons, representing 0.9% of its naphtha
requirements, respectively, through imports of naphtha from suppliers
located principally in Africa and elsewhere in South America.</FONT></TD>
</TR>
</TABLE>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The current supply contract with Petrobras was initially entered into in
1978, had an initial duration of 10&nbsp;years and is automatically renewable
thereafter for further 10&nbsp;year periods. The current term expires in 2008. The
Company intends to import approximately 30% of its annual naphtha requirements
in the future.
</FONT>

<P align="left"><FONT size="2"><B><I>Sales and Marketing of Basic Petrochemical Products</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth, for the years ended December&nbsp;31, 2002,
2001, and 2000, certain information regarding net sales of the Company&#146;s Basic
Petrochemicals Unit.
</FONT>

<P align="center"><FONT size="2">34</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="90%">
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
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    <TD width="3%">&nbsp;</TD>
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    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="35"><FONT size="1"><B>Year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="35"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Quantities</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Quantities</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Quantities</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>sold</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Net Sales</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>sold</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Net Sales</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>sold</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Net Sales</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(thousands of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(millions of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(thousands</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(millions of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(thousands of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(millions of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>tons)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>U.S. dollars)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(%)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>of tons)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>U.S. dollars)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(%)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>tons)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>U.S. dollars)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(%)</B></FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Domestic Sales</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">994.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">412.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">42.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1064.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">514.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">42.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1103.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">636.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">44.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px"><FONT size="2">Ethylene(1)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">994.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">412.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">42.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1064.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">514.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">42.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1103.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">636.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">44.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px"><FONT size="2">Propylene(2)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">415.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">147.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">421.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">148.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">487.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">228.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px"><FONT size="2">Para-xylene(3)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">99.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">38.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">114.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">55.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">128.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">61.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px"><FONT size="2">Benzene(4)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">223.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">67.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">223.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">66.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">233.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">85.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px"><FONT size="2">Butadiene</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">147.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">55.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">134.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">65.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">153.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">68.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px"><FONT size="2">Mixed xylenes</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">52.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">50.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">51.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px"><FONT size="2">Ortho-xylene</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">48.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">41.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">36.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px"><FONT size="2">Toluene</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">78.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">24.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">108.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">34.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">55.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px"><FONT size="2">Others</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">85.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">84.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">128.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total domestic net sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">868.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">89.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1006.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">89.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1263.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">88.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total export net sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">99.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">121.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">167.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Total basic petrochemicals net
sales</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">968.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1127.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1431.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(1)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Includes 471.9 thousand tons and 378.9 thousand tons of ethylene
transferred to other business units of the Company during 2002 and 2001,
respectively.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(2)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Includes 27.0 thousand tons and 19.6 thousand tons of propylene
transferred to other business units of the Company during 2002 and 2001,
respectively.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(3)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Includes 45.2 thousand tons and 39.2 thousand tons of para-xylene
transferred to other business units of the Company during 2002 and 2001,
respectively.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(4)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Includes 65.4 thousand tons and 49.0 thousand tons of benzene transferred
to other business units of the Company during 2002 and 2001, respectively.</FONT></TD>
</TR>
</TABLE>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
sales of basic petrochemicals accounted for 38.8% and 42.2% of the
Company&#146;s net revenues on a combined basis for the years ended December&nbsp;31,
2002 and 2001, respectively, giving effect to the Nova Cama&#231;ari Acquisition and
the Related Party Mergers as if they had occurred on January&nbsp;1, 2001. During
the year ended December&nbsp;31, 2000, net sales of basic petrochemicals accounted
for 91.8% of Copene&#146;s net revenues.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the year ended December&nbsp;31, 2002, net sales of basic petrochemicals
in Brazil accounted for U.S.$868.8&nbsp;million, representing 77.1% of the Basic
Petrochemicals Unit&#146;s total net sales. In 2002, net sales of gasoline in the
domestic market (not included in the table above) were U.S.$ 24.0&nbsp;million. In
the same year, exports sales by the Basic Petrochemicals Unit (including
gasoline sales of U.S.$27.7&nbsp;million) accounted for approximately U.S.$127.6
million representing 11.3% of the Basic Petrochemicals Unit&#146;s net sales.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company sells its basic petrochemicals products in Brazil mainly to
second generation producers located in the Northeastern Complex as well as to
customers in the United States and Europe. As is common with other first
generation petrochemical producers in Brazil, the Company&#146;s Basic
Petrochemicals Unit has a high concentration of sales of basic petrochemicals
to a limited number of customers.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of the Company&#146;s strategy following its formation in August 2002,
its Basic Petrochemicals Unit has focused on developing longer-term
relationships with its customers. The Company has entered into long-term
supply contracts with several second generation producers located in the
Northeastern Complex. These supply contracts generally have an initial 10-year
term that is automatically renewable for five-year periods, unless one party
notifies the other of its intention not to renew. The contracts provide for
minimum and maximum quantities and monthly deliveries. The Company also sells
liquified petroleum gasoline and automotive gasoline to Petrobras pursuant to a
long-term contract.
</FONT>

<P align="center"><FONT size="2">35</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company determines the prices for its olefins and aromatics products
with reference to several market factors. The price of ethylene that the
Company charges is based on a margin sharing system. Under this system, the
benefit or burden of higher or lower prices for ethylene derivatives, such as
polyethylene, is shared between the Company and its customers. Conversely, the
benefit or burden of higher or lower prices of naphtha will also be shared with
the Company&#146;s customers. The margin to be shared by first and second
generation producers is calculated for each second generation product based on
the market price charged by the second generation producer for its polyolefin
resins. The market price for ethylene is based on benchmark costs imputed to,
and actual costs incurred by, both first and second generation producers for
the production of second generation products. The benchmark cost factors
considered in determining the cost margin are the fixed costs, including
depreciation, of leading first and second generation producers located in
Europe. European producers are included in the calculation because, like
Brazilian producers, they use naphtha as their primary feedstock (whereas first
generation producers in the United States use natural gas as a feedstock for
ethylene). Actual variable costs incurred by first and second generation
producers are also used in calculating the price of ethylene. The margin for
each product is determined by subtracting the production cost of each product
from the average market price charged by the second generation producers for
such product. This margin is then divided between the relevant first and
second generation producers on a <I>pro rata </I>basis to reflect the relative capital
investments made by the first and second generation producers in the production
process for each product. The actual margins realized by the first and second
generation producers depend on the degree to which their actual costs compare
with the benchmark costs used in the pricing formula to calculate the margin.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company calculates the monthly price of propylene by multiplying the
monthly ethylene price it charges (including Brazilian taxes) by the ratio of
the European contract price for propylene to the European contract price for
ethylene. The Company determines the price of butadiene by using the European
contract price for butadiene and its prices, unlike prices for the other basic
petrochemical products, include freight costs. The Company sets the prices of
solvents, fuels and Utilities with reference to domestic Brazilian prices for
these items.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Basic Petrochemical Unit&#146;s volume of export sales has, in large part,
traditionally been a function of domestic demand for the Company&#146;s products.
Export sales represented 11.3% of the Basic Petrochemicals Unit&#146;s net sales in
2002 and 9.1% in 2001. These sales were made mainly to customers in Europe and
the United States. The Company&#146;s management believes that the Company&#146;s
natural market for basic petrochemicals is Brazil, although it intends to
increase export sales of automotive gasoline to the United States. The
Company&#146;s main focus is to maintain its leading position in the Brazilian
market, while continuing to use its export operations to manage the
relationship between installed capacity and domestic demand. The Company
believes that its continued presence in the export markets is essential to
manage overcapacity relating to the Brazilian market.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company sets export prices for: (1)&nbsp;benzene, toluene, MTBE and gasoline
with reference to prices prevailing in the U.S. Gulf market; (2)&nbsp;propylene,
para-xylene, ortho-xylene and butene-1 with reference to prices prevailing in
the European market; and (3)&nbsp;ethylene and butadiene on the basis of a derivative
pricing formula.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to petrochemicals, Braskem produces Utilities for its own use
and for sale to other second generation producers in the Northeastern Complex.
The following table sets forth, for the years ended December&nbsp;31, 2002, 2001 and
2000, certain information regarding the Basic Petrochemicals Unit&#146;s sales of
Utilities.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="35"><FONT size="1"><B>Year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="35"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Quantities</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Quantities</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Quantities</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>sold</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Net Sales</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>sold</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Net Sales</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>sold</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Net Sales</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(millions</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(millions</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(millions</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>of U.S.</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>of U.S.</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>of U.S.</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>dollars)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(%)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>dollars)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(%)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>dollars)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(%)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Electricity (1,000 MWh)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,264.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">38.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35.<I>7</I></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,437.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">50.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">42.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,368.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">46.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">37.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Steam (1,000 tons)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,044.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">59.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">56.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,944.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">59.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">49.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,903.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">68.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">55.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Treated water (1,000 m<SUP>3</SUP>)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15,742.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16,309,2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16,211.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Compressed air (1,000 Nm<SUP>3</SUP>)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">205,515.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">202,602.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">199,158.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Total sales of utilities</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">106.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">119.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">124.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">36</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net sales of Utilities accounted for 4.3% and 4.5% of the Company&#146;s net
revenues on a combined basis for the year ended December&nbsp;31, 2002 and 2001,
respectively. During the year ended December&nbsp;31, 2002, net sales of Utilities
accounted for U.S.$106.8&nbsp;million, representing 9.5% of the Basic Petrochemicals
Unit&#146;s net sales.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since August&nbsp;15, 2000, Braskem has been authorized by the ANP to produce
and sell automotive gasoline. In October 2001, in addition to gasoline, the
Company was authorized to produce and sell LPG. Net sales of fuels amounted to
U.S.$51.7&nbsp;million in 2002, as compared to U.S.$84.5&nbsp;million in 2001,
corresponding to 6.4% and 4.6% of the Basic Petrochemicals Unit net revenue for
these years, respectively.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales of type &#147;A&#148; gasoline reached 324,000 cubic meters in 2002, compared
to 349,000 cubic meters in 2001, representing a decrease of 7%. Over the last
two years, the Company has been consolidating its position as a reliable
gasoline supplier in the Northeastern States of Pernambuco, Bahia, Paraiba and
Alagoas. The Company&#146;s participation in the gasoline market in the
Northeastern region of Brazil reached 6% in 2002.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Braskem&#146;s services business involves the storage of gaseous petrochemical
products for companies located in the Northeastern Complex and is undertaken by
Braskem&#146;s controlled subsidiary, Tegal. Tegal is located in the port terminal
of Aratu in the State of Bahia.
</FONT>
<P align="left"><FONT size="2"><B><I>Competition</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although there are currently three major petrochemical complexes in
Brazil, Braskem&#146;s basic petrochemicals customers, which are mostly second
generation petrochemical producers with plants located in the Northeastern
Complex, are unlikely to be able to obtain their feedstocks elsewhere at lower
prices due to high transportation costs and logistical difficulties. Because
ethylene requires cryogenic storage and transportation, at temperatures below
-100&#186; Celsius, exporting and importing ethylene is extremely costly.
Because propylene may be compressed, it is generally less costly to import or
export than ethylene. In addition, because Brazil is self-sufficient in the
production of olefins, imports of these products are sporadic and generally
associated with scheduled plant maintenance shutdowns. In 2002, a very small
amount of ethylene was imported into Brazil.
</FONT>
<P align="left"><FONT size="2"><B>The Polyolefins Unit</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s Polyolefins Unit is comprised of the operations of Polialden
and the operations conducted by OPP Qu&#237;mica prior to its merger with and into
the Company. Prior to the OPP Merger on August&nbsp;16, 2002, the only operations
of the Polyolefins Unit were those conducted by Polialden. Prior to the Nova
Cama&#231;ari Acquisition on July&nbsp;25, 2001, the Company did not conduct any
polyolefins operations. The results of Polialden are included in the
Consolidated Financial Statements for periods after July&nbsp;25, 2001, the date of
the Nova Cama&#231;ari Acquisition. Although the Company acquired OPP Qu&#237;mica on
August&nbsp;16, 2002, the results of OPP Qu&#237;mica are included in the Consolidated
Financial Statements in a manner similar to a pooling-of-interests for periods
after July&nbsp;25, 2001 as a result of the common control exercised by the
Odebrecht Group over the Company and OPP Produtos after July&nbsp;25, 2001, the date
of the Nova Cama&#231;ari Acquisition and the date on which such common control had
commenced. See &#147;History and Development of the Company&#148; and &#147;Item&nbsp;5. Operating
and Financial Review and Prospects&#151;The Auction, the Nova Cama&#231;ari Acquisition
and the Related Party Mergers.&#148; Historical financial information with respect
to the Polyolefins Unit is set forth in Note 18 to the Consolidated Financial
Statements. The financial information with respect to the Polyolefins Unit
that is contained in this section is based on the combined historical results
of Polialden and OPP Qu&#237;mica prepared in accordance with the Brazilian
Corporate Law and may not be indicative of the results that the Company&#146;s
Polyolefins Unit will achieve in the future.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s polyolefin&#146;s operations are conducted at seven plants
located at two of Brazil&#146;s petrochemical complexes. Four plants are dedicated
to the production of polyethylene (two at the Southern Complex and two at the
Northeastern Complex), and three plants at the Southern Complex are dedicated
to the production of polypropylene.
</FONT>


<P align="center"><FONT size="2">37</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left"><FONT size="2"><B><I>Products of the Polyolefins Unit</I></B>
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following chart shows the major products produced by the Polyolefins
Unit and their most common end uses.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="53%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Company&#146;s Products</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Most common end uses</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Low density/linear low density Polyethylene</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Garbage bags, packaging film, toys, housewares,<BR>
electrical insulation, paper coatings</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">High density polyethylene</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Blow-molded and injection-molded plastic bottles
(such as milk bottles), crates, automotive fuel tanks</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Polypropylene</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Carpet-backing, luggage, bottles, diapers, raffia bags</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Ultra High Molecular Weight Polyethylene</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Compression-molded sheets, porous parts, ram-extruded<BR>
sheets, profiles, filters, rods</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The manufacturing process of polyethylene and polypropylene generally
consists of compressing ethylene and propylene, respectively, in a high
pressure reactor. Catalysts are then added to the polymerization process,
producing polyethylene and polypropylene. After the polymerization process,
the polymers enter the decompression phase, during which additives are inserted
to provide the final characteristics of the polyethylene and polypropylene
resins.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Polyethylene has the simplest chemical structure of all commercial
polymers and is a very versatile material. World production volume of
polyethylene is the highest among all commercial plastics. Polyethylene is used
to manufacture a wide variety of products.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;While each form of polyethylene is preferred for certain applications,
there is some overlap in the uses of these resins, and with certain
modifications, polyethylene resins may be substituted for each other in certain
end product manufacturing processes. For example, demand for linear low
density polyethylene has grown since first introduced in 1989 and reduced
demand for low density polyethylene as manufacturers of certain containers and
film applications have switched their processes and technology to use linear
low density polyethylene in a blend with low density polyethylene.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company produces a variety of polyethylene resins, including low
density polyethylene, linear low density polyethylene, high density
polyethylene and ethylene vinyl acetate copolymer. The manufacturing process
employed by its customers and the desired physical characteristics of the end
product determine the polyethylene resin used. Low density polyethylene is the
most flexible of polyethylene products and is used in a variety of film
applications and in food packaging, trash bags and shopping bags. Linear low
density polyethylene is used in applications requiring greater sealing capacity
and better mechanical resistance, including films and flexible food packaging.
For those applications that require rigidity, polyethylene offers the necessary
strength.
</FONT>
<P align="left"><FONT size="2"><B><I>Production Capacity and Technology of the Polyolefins Unit</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The table below sets forth the location, main products, production
capacity and tons produced for the years presented for each plant currently in
the Company&#146;s Polyolefins Unit.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="33%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Production (in tons)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>&nbsp;</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Year Ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Production</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Location (Complex)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Main Products</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Capacity (1)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>(in tons)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Triunfo (Southern)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">Low density polyethylene</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">210,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">203,354</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">194,060</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">Polypropylene (2)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">Polypropylene</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">215,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">189,226</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">184,371</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">Polypropylene</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">235,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">215,120</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">192,316</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">High density</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">polyethylene/</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">linear low density</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">polyethylene (3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">300,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">216,171</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">197,319</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2">38</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="27%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="21%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Production (in tons)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>&nbsp;</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Year Ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Production</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Location (Complex)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Main Products</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Capacity (1)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cama&#231;ari (Northeastern)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">High density polyethylene/</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">linear low density(3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">200,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">141,089</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">165,8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">High density polyethylene /</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom"  bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">Ultra High Molecular Weight</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">Polyethylene</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">130,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">103,892</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">125,441</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Represents annual effective capacity in 2002.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">This slurry plant is currently inactive.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(3)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Plant with swing line, capable of producing two types of resins.
Capacity varies depending on actual production.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s polyethylene is produced at four plants, two located at the
Southern Complex and two located at the Northeastern Complex. The Company&#146;s
first polyethylene plant, located at the Southern Complex, commenced operations
in 1982 and produces all of the Company&#146;s low density polyethylene. This plant
uses high-pressure Equistar technology on its autoclave line and tubular
technology on its second line. This plant had an original annual capacity of
120,000 tons, but it has since been debottlenecked to 210,000 tons.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The second polyethylene plant located at the Southern Complex, which
commenced operations in 1999, is a 300,000 ton high density polyethylene/linear
low density polyethylene swing plant that uses low-pressure Spherilene&#174;
technology licensed from Basell (formerly known as Montell). The Company
entered into a license agreement for the Spherilene&#174; technology that requires
the payment of certain fees and annual royalties based on the amounts of linear
low density polyethylene produced at this plant.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;One of the polyethylene plants located at the Northeastern Complex is
capable of producing both high density polyethylene and linear low density
polyethylene on its two production lines. This plant uses Unipol&#174;
low-pressure, gas-phase technology, developed by Union Carbide Corporation.
The Company was granted a license in 1988, effective in 1992, to use Unipol&#174;
catalyst technology. The license expires in 2007 and includes provisions for
purchase of catalysts by the Company during the term of the license. The
Company made a lump sum royalty payment at the time of execution of the license
and has no continuing royalty obligations. The Company pays for catalysts as
they are supplied. The other polyethylene plant in the Northeastern Complex
uses Mitsubishi&#174; slurry technology and is capable of producing high density
polyethylene and ultra-high molecular weight polyethylene.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company produces polypropylene at three plants located at the Southern
Complex. Both the first bulk plant, which commenced operations in 1991, and
the second bulk plant, which commenced operations in 1997, use Spheripol&#174;
technology developed by Basell. The Company entered into a license in 1987 to
use the Basell Spheripol&#174; technology at its polypropylene plants, effective
upon the commencement of operations in 1991. Pursuant to this license, the
Company is allowed to use the technology for its current and future plants,
without paying any additional royalties (<I>e.g.</I>, the Company has satisfied its
royalties obligations under the agreement). The Company&#146;s first bulk plant had
an original annual capacity of 130,000 tons, but the Company has debottlenecked
to 215,000 tons. Similarly, the Company&#146;s second bulk plant had an original
annual capacity of 160,000 tons, but it has been debottlenecked to over 235,000
tons.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s third polypropylene plant, which commenced operations in
1983, uses slurry technology developed by Hercules Inc. This plant had an
original annual capacity of 50,000 tons, but the Company has debottlenecked it
to over 100,000 tons. Although this plant uses older technology and is now
inactive, the Company&#146;s management believes that the quality of the products
produced by this plant is comparable to the quality of products produced by
plants with newer technology. Management intends to introduce new Spherizone&#174;
technology in each of its polypropylene plants beginning in 2005 and 2006.
</FONT>
<P align="center"><FONT size="2">39</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2"><B><I>Maintenance of Polyolefins Unit Plants</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company has a regular maintenance program for each of its polyolefins
plants. Production at each polyolefins plant generally is shut down for 15 to
30&nbsp;days every two years to allow for regular inspection and maintenance. Other
brief stoppages that do not materially affect production occasionally take
place for maintenance purposes. The Company coordinates the maintenance cycles
of its Polyolefins plants with those of its Basic Petrochemicals plants. While
its Basic Petrochemicals facilities must be shut down for up to 30&nbsp;days for
scheduled maintenance, the Company&#146;s Polyolefins facilities are shut down for
shorter periods because the Company maintains feedstock storage facilities that
enable its polyolefin plants to operate for up to two weeks.
</FONT>
<P align="left"><FONT size="2"><B><I>Research and Development</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Polyolefins Unit maintains technology, innovation and application
facilities at the Southern Complex. The Polyolefins Unit&#146;s staff of 132
employees seeks to (1)&nbsp;optimize the ease with which clients process the
products of the Polyolefins Unit, (2)&nbsp;identify new product market
opportunities, (3)&nbsp;increase existing capacity, (4)&nbsp;reduce operating costs and
(5)&nbsp;upgrade and optimize product technology in order to develop new products in
response to customer requirements.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Polyolefins Unit maintains Spheripol&#174;, Spherilene&#174; and Unipol&#174; pilot
plants in the Southern Complex and the Northeastern Complex. Two of the
Polyolefins Unit&#146;s three pilot plants operate at l/100 the scale of its
full-scale plants, and the other pilot plant operates at 1/200 the scale of its
full-scale plants. The Polyolefins Unit uses its pilot plants to test
potential efficiency-enhancing modifications to various stages of the
production process and new product formulations. Management believes that
these pilot plants give the Company a competitive advantage, as the Company&#146;s
competitors in Brazil do not maintain pilot plants.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Polyolefins Unit maintains catalysis, polymerization and polymer
sciences laboratories in the Southern Complex and the Northeastern Complex.
These laboratories assist the Company to develop new and improve existing
(licensed or otherwise) catalysts and grades of portfolio resins. The Company
has developed or improved upon the majority of the polyethylene and
polypropylene products that it sells based on technology developed by the
Company.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Polyolefins Unit maintains processing engineering and automation
centers in the Southern Complex and the Northeastern Complex. These centers
assist the Company in developing advanced process control technology that the
Company makes available for licensing through a partnership with Pavilion
Technology Inc. in the United States. These centers also assist the Company to
(1)&nbsp;reduce its variable costs, (2)&nbsp;achieve operational stability and (3)
increase its polyolefins production to optimal levels.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;While the Polyolefins Unit does not engage in new process technology
research and development, it remains in regular contact with process technology
licensors to keep abreast of new technologies and improvements. The Company
tests new processes on a regular basis for potential licensing and follows
advances and trends in the petrochemical industry through its relationships
with Brazilian and international research universities and consortia, such as
the University of Wisconsin Polymerization Reaction Engineering Laboratory at
the University of Wisconsin-Madison. In addition, the Company maintains
ongoing contracts with licensors in order to receive and install improvements
developed for its existing processes.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of the Company&#146;s technology licensing arrangements, it has entered
into technology sharing agreements with its licensors, whereby it is required
to share with its licensors, and its licensors are required to share with it,
any improvements made in the Unipol&#174;, Spheripol&#174; and Spherilene&#174; technologies.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company believes that the technology of the Polyolefins Unit allows
the Company to produce, and to compete with other producers of, very high
quality polyolefins products.
</FONT>
<P align="center"><FONT size="2">40</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2"><B><I>Raw Materials of Polyolefins Unit</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Ethylene
and Propylene.</u> The most significant direct costs associated with
the production of polyethylene and polypropylene are the cost of ethylene and
propylene, which together accounted for approximately 74% of the Company&#146;s
Polyolefins Unit&#146;s total cost of sales during the year ended December&nbsp;31,
2002. In 2002, approximately 33% and 64% of these raw materials were supplied
by the Basic Petrochemicals Unit and Copesul, respectively. Because the cost
of storing and transporting ethylene and propylene is substantial and there is
inadequate infrastructure in Brazil for importing large quantities of ethylene
or propylene, the Polyolefins Unit is highly dependent on the supply of
ethylene and propylene supplied by the Basic Petrochemicals Unit and Copesul.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2002, Copesul had an annual ethylene capacity of
1,350,000 tons and an annual propylene production capacity of 567,000 tons.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has entered into a long-term ethylene and propylene supply
contract with Copesul that extends through 2007 and is automatically renewable
for additional five-year terms. The Company owns 29.5% of the total capital
stock of Copesul. The Company&#146;s ethylene purchases from Copesul are subject to
an annual minimum of 268,200 tons and an annual maximum of 451,000 tons, while
the Company&#146;s propylene purchases are subject to an annual minimum of 262,200
tons and an annual maximum of 439,500 tons, in each case subject to daily and
monthly limits. In 2002, the Company purchased approximately 388,000 tons of
ethylene and all of its requirements of propylene (approximately 390,000 tons)
from Copesul for the Company&#146;s polyolefins operation in the Southern Complex.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company negotiates the prices for the feedstocks for the Company&#146;s
polyolefins products with Copesul, based upon a pricing formula developed by the
Brazilian petrochemical industry. The pricing formula provides for a method of
cost margin sharing between the first generation and second generation
producers located at the respective petrochemical complexes. For a description
of the pricing of ethylene purchased by the Polyolefins Unit from the Basic
Petrochemicals Unit, see &#147;&#151;The Basic Petrochemicals Unit&#151;Sales and Marketing of
Basic Petrochemical Products.&#148; The prices charged by Copesul for ethylene that
it supplies to the Polyolefins Unit are based on a similar formula.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the average prices per ton paid by OPP
Qu&#237;mica and Polialden for ethylene and propylene for the years indicated:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Year Ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="7"><FONT size="1"><B>(U.S.$ per ton)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Ethylene (1)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">415</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">483</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Ethylene (2)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">453</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">528</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Propylene (1)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">354</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">352</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Propylene (2)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">378</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Ethylene and propylene supplied by Braskem&#146;s Basic Petrochemicals
Unit.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Ethylene and propylene supplied by Copesul.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the production of linear low density polyethylene, the Company also
uses butene and hexene as raw materials. Butene is supplied by Copesul and by
the Basic Petrochemicals Unit, and the Company imports hexene from suppliers
located in South Africa.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Other
Materials.</u> In addition to overhead costs such as labor and
maintenance, other costs associated with the production of polyethylene and
polypropylene are for chemical catalysts, solvents and utilities, such as
electricity, water, steam and nitrogen.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Unipol&#174; plant in the Northeastern Complex uses catalysts, primarily
Philips and Ziegler-Natta, supplied to Braskem by Union Carbide under a 15-year
license. The high density polyethylene slurry plant produces its own catalysts. Akzo Chemicals Inc., which produces catalysts under a license
from Basell, supplies the Polyolefins Unit with catalysts for polypropylene
production on the bulk line in the Southern Complex. The Company imports some
catalysts from the United States and Europe. In addition, the Company has
invested in the production of its own catalysts for use in most of its existing
production processes, as it believes that increasing Braskem&#146;s production of
its own catalysts will decrease production costs and reduce the Company&#146;s
dependency on imported catalysts. The Company purchases other catalytic
agents, together with the inputs that the Company needs to produce its own
catalysts for its slurry plant in the Northeastern Complex (to produce high
density and ultra high molecular weight polyethylene) from various suppliers at
market prices.
</FONT>
<P align="center"><FONT size="2">41</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s Basic Petrochemicals Unit supplies the Polyolefins Unit&#146;s
facilities in the Northeastern Complex with steam and water. Electricity is
supplied at both complexes by third parties pursuant to long-term contracts,
and in the Northeastern Complex by the Basic Petrochemicals Unit. Nitrogen is
supplied at the Northeastern Complex by independent third parties. Copesul and
a third party distributor supply the Southern Complex with nitrogen. The
Company&#146;s polyolefins plants in the Northeastern Complex are able to receive
electricity from alternate sources if the Company is unable to meet its demand
for electricity from its Basic Petrochemical Unit. The Company believes that
there are sufficient alternative sources available at reasonable prices for
these other inputs used in its polyolefins production process such that the
loss of any single supplier would not have a material adverse effect on the
Company&#146;s operations.
</FONT>
<P align="left"><FONT size="2"><B><I>Sales and Marketing of Polyolefins Products</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth, for the years ended December&nbsp;31, 2002 and
2001, certain information regarding the combined net sales of Polialden and OPP
Qu&#237;mica.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="43%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="23"><FONT size="1"><B>Year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="23"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Quantities</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Quantities</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>sold</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Net Sales</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>sold</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Net Sales</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(thousands of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(millions of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(thousands</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(millions of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>tons)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>U.S. dollars)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(%)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>of tons)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>U.S. dollars)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(%)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Domestic Sales</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Polypropylene</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">395.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">266.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">30.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">338.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">266.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">31.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Low density polyethylene</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">133.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">94.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">116.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">101.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Linear low density
polyethylene</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">130.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">92.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">124.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">103.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">High density polyethylene</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">227.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">158.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">250.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">204.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">24.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Ultra high molecular
weight polyethylene</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Others</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total domestic sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">886.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">613.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">70.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">833.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">678.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">80.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Exports</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">260.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">29.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">168.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Total polyolefins net sales</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">873.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">847.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net sales of the Polyolefins Unit accounted for 35.1% and 31.7% of the
Company&#146;s net revenues on a combined basis for the year ended December&nbsp;31, 2002
and 2001, respectively.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of the Company&#146;s acquisition in January 2002 of the ultra high
molecular weight polyethylene business of Basell in the United States and
Basell&#146;s Brazilian subsidiary, the Company became the world&#146;s second largest
producer of UHMWP, a high technical performance engineering plastic. Exports
of UHMWP increased by 186% in 2002, from 5,000 tons in 2001 to 14,300 tons in 2002, allowing the
Company to occupy an important strategic position in the markets for this
product in the United States and in Europe.
</FONT>
<P align="center"><FONT size="2">42</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of the Company&#146;s efforts to integrate the operations of OPP
Qu&#237;mica into the Company, the Company&#146;s Polyolefins Unit has focused on
developing longer-term relationships with its customers. Recognizing the
cyclical nature of the markets for its commodity products, the Company believes
that it can strengthen customer loyalty during periods of low demand for
polyethylene or polypropylene by providing a reliable source of supply to these
customers during periods of high demand. Each account manager in the
Polyolefins Unit is assigned numerous customers within a particular geographic
area and works closely with these customers to determine their needs, to
provide technical assistance and to coordinate the production and delivery of
products with characteristics responsive to those needs. Customers submit
annual proposals giving their estimated monthly requirements for the upcoming
year for each of the Company&#146;s polyolefins products, including technical
specifications, delivery terms and proposed payment conditions. Account
managers evaluate these proposals monthly to make any required adjustments and
to monitor and ensure availability of supply for each customer.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to direct sales to the Company&#146;s customers, the Polyolefins
Unit sells the Company&#146;s products through eight exclusive independent
distributors. These distributors sell polyethylene and polypropylene products
to manufacturers with lower volume requirements and can aggregate multiple
orders for production and delivery such that the Company and its ultimate
customers can share the cost savings. Furthermore, by serving smaller
customers through a network of distributors, account managers in the
Polyolefins Unit have been able to focus their efforts on delivering high
quality service to a smaller number of direct customers. The Polyolefins Unit
intends to continue to establish relationships with distributors that can
consolidate sales to smaller customers and to increase sales through these
distributors.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company determines the prices for its polyethylene and polypropylene
products with reference to several market factors that include the prices paid
by third generation producers for imports of these products and prevailing
market prices in Brazil.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s volume of export sales traditionally has, in large part,
been a function of domestic demand for its products. Export sales represented
29.8% of the Polyolefins Unit&#146;s net sales in 2002 and 19.9% in 2001. These
sales were made mainly to customers in South America and, to a lesser extent,
in Asia, Africa, the Middle East and Europe.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s main focus is to maintain its leading position in the
Brazilian market, while continuing to use the Company&#146;s export operations to
manage the relationship between its installed capacity and domestic demand for
its products. Currently, the Polyolefins Unit targets an annual average
production in excess of expected Brazilian market demand by approximately 20%
in order to meet variations in local demand and to respond to production
fluctuations, seasonality and export product sales. The Company believes that
its continued presence in the export markets is essential to manage
overcapacity in the Brazilian market.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s principal export market for polyolefins is South America,
particularly the Mercosul countries, and the Company intends to increase its
focus on sales of polyolefins in the Mercosul countries as well as in Chile.
The Company has established a strategic position in the Southern Cone countries
through regular sales to local distributors and agents who are knowledgeable in
their respective markets. The Company&#146;s strategy to increase its presence in
the Southern Cone is intended, among other benefits, to reduce its exposure to
the cyclicality of the international spot market through the development of
long-term relationships with customers in neighboring countries. Export prices
for sales in the Southern Cone countries of South America are based on regional
prices, and these sales are made either with letters of credit or through bank
collections.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Export sales to buyers in countries outside the Southern Cone are based on
international prices. The Company&#146;s customer base consists primarily of
trading houses, most of which have operations in the United States or in Hong
Kong. All sales of this type are made with letters of credit.
</FONT>
<P align="center"><FONT size="2">43</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left"><FONT size="2"><B><I>Competition</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2002, imports of polyethylene into Brazil represented less than 17%
(11% in 2001) of Brazil&#146;s total consumption of polyethylene and less than 10%
(less than 10% in 2001) of Brazil&#146;s total consumption of polypropylene. The
Company anticipates that competition from international producers may increase
substantially, both in Brazil and in selected foreign markets in which the
Company plans to attempt to increase sales of its polyolefins products. For
example, Dow Chemical recently built a linear low density polyethylene facility
in Bah&#237;a Blanca, Argentina, which facility became operational in 2001 with an
annual capacity of 210,000 tons.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company competes with a small number of Brazilian polyolefins
producers and, to a lesser extent, with importers of these products. In the
Brazilian polyethylene market, the Company competes with a number of companies
that produce one or two of the products in its production line. Politeno, in
which the Company owns 35.0% of the voting captial stock,
representing 34.7% of the total capital stock, produces
the same range of polyolefins products as the Company. Low density
polyethylene is produced by Union Carbide do Brasil S.A., Petroqu&#237;mica Triunfo
S.A. (&#147;Triunfo&#148;) and Politeno, which in 2002 had installed capacities of
144,000 tons, 150,000 tons and 145,000 tons, respectively, compared to the
Company&#146;s installed capacity of 210,000 tons. However, the Company&#146;s
management believes that over the next few years, production of low density
polyethylene will be phased out and replaced by linear low density polyethylene
in the packaging segment. Accordingly, growth of the low density polyethylene
market should be limited, although reduced supply of low density polyethylene
may cause its price to exceed the price of linear low density polyethylene in
the short term.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Politeno and Ipiranga are the only other Brazilian producers of linear low
density polyethylene, and in 2002, they had installed annual capacity of
180,000 tons and 150,000 tons, respectively, at swing plants that are also
capable of producing high density polyethylene, compared to the Company&#146;s
installed annual capacity of 300,000 tons. Rio Pol&#237;meros, a Brazilian
petrochemical company, is constructing a petrochemical plant in Duque de
Caxias, Rio de Janeiro, with a capacity to produce annually 520,000 tons of
ethylene, 75,000 tons of propylene and 540,000 tons of linear low density
polyethylene and high density polyethylene, which will increase annual
aggregate Brazilian production capacity of polyethylene by 35%. The plant will
use natural gas as a feedstock, and Rio Pol&#237;meros has announced that it will
commence operations in July 2004.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Politeno, Ipiranga and Solvay also produce high density polyethylene. In
2002, these companies had installed high density polyethylene capacity of
180,000 tons, 500,000 tons and 82,000 tons, respectively.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the Brazilian polypropylene market, the Company competes with Ipiranga,
Polibrasil (controlled by Basell, the largest polypropylene manufacturer in the
world and a leader in polypropylene technology, and Suzano) and Braspol
Pol&#237;meros S.A. These companies have combined installed annual capacity of
775,000 tons. In addition, Polibrasil is building a 300,000 ton polypropylene
plant in Mau&#225;, S&#227;o Paulo, which is expected to commence operations in the
second half of 2003.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company does not have any competitors in the Brazilian ultra high
molecular weight polyethylene market. Internationally, the Company&#146;s primary
competition in this market is Tacona (a business of German company, Celanese
AG), which has 52% of the world wide production capacity of ultra high
molecular weight polyethylene (twice the Company&#146;s production capacity).
</FONT>
<P align="left"><FONT size="2"><B>The Vinyls Unit</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s Vinyls Unit is comprised of the operations of Trikem. Prior
to the OPP Produtos Merger on August&nbsp;16, 2002, the Company did not conduct any
vinyls operations. Although the Company acquired Trikem on August&nbsp;16, 2002,
the results of Trikem are included in the Consolidated Financial Statements in
a manner similar to a pooling-of-interests for periods after July&nbsp;25, 2001 as a
result of the common control exercised by the Odebrecht Group over the Company
and Trikem after July&nbsp;25, 2001, the date of the Nova Cama&#231;ari Acquisition and
the date on which such common control had commenced. See &#147;History and
Development of the Company&#148; and &#147;Item&nbsp;5. Operating and Financial Review and
Prospects&#151;The Auction, the Nova Cama&#231;ari Acquisition and the Related Party
Mergers.&#148; Historical financial information with respect to the Vinyls Unit is
set forth in Note 18 to the Consolidated Financial Statements. The financial information with respect to the
Vinyls Unit contained in this section is based on the historical results of
Trikem prepared in accordance with Brazilian Corporate Law and may not be
indicative of the results that the Company&#146;s Vinyls Unit will achieve in the
future.
</FONT>

<P align="center"><FONT size="2">44</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s vinyls operations are conducted at five plants located in
the Brazilian States of Bahia, Alagoas and S&#227;o Paulo. Three plants are
dedicated to the production of PVC, and two plants are dedicated to the
production of caustic soda and chlorine (with the latter also producing
ethylene dichloride).
</FONT>
<P align="left"><FONT size="2"><B><I>Products of the Vinyls Unit</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following chart shows the major products produced by the Vinyls Unit
and their typical end uses.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="32%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="63%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Products</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Typical end uses</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Polyvinylchloride (PVC)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Pipes, sheeting, flooring, cable insulation,
electrical conduit, packaging, laminated products,
medical applications, toys, synthetic leather,
flooring materials, bottle caps and seals,
automobile corrosion prevention treatments and
wallpaper coatings</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Caustic Soda</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Aluminum, pulp and paper, petrochemicals and other
chemicals, soaps and detergents, waste treatment,
textiles, dyes, food processing and electroplating</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Ethylene Dichloride</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Polyvinylchloride (PVC)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Chlorine</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Ethylene Dichloride</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PVC. The Company&#146;s Vinyls Unit produces suspension and emulsion PVC in
various grades, as well as PVC copolymers. PVC is sold in bags and transported
to third generation producers by truck. Approximately 95% of the Company&#146;s PVC
production is in the form of suspension PVC. The grades of PVC produced by the
suspension process are the most widely used, including for use in the
manufacture of pipes, sheeting, flooring, cable insulation, electrical conduit,
packaging, laminated products and medical applications. PVC copolymers and
grades of PVC produced by the emulsion process are more specialized products
and are used in the manufacture of toys, synthetic leather, flooring materials,
bottle caps and seals, automobile corrosion prevention treatments and wallpaper
coatings. The Company&#146;s Vinyls Unit also produces ethylene dichloride, the
principal feedstock used in the production of PVC. The Company used
approximately 75% of its ethylene dichloride production in 2002 for further
processing into PVC and exported the remainder.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Caustic Soda and Chlorine. The Company&#146;s Vinyls Unit also produces
caustic soda and chlorine. Caustic soda is a basic commodity chemical that is
sold to producers of aluminum, pulp and paper, petrochemicals and other
chemicals, soaps and detergents and to waste treatment plants. Caustic soda is
also used in the textile industry to make fabrics more absorbent and improve
the strength of dyes and in food processing and electroplating. The Company&#146;s
other business units consume approximately 3% of the caustic soda produced by
the Vinyls Unit, and the remainder is sold to third parties.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chlorine is a basic commodity chemical that is used in a large variety of
industries, with applications in water treatment and chemical and
pharmaceutical production. The Company consumes approximately 81% of the Vinyl
Unit&#146;s chlorine production in its production of ethylene dichloride. The
Company sells most of its remaining chlorine to a Brazilian company located
near the Northeastern Complex that is connected to the Company via a
specialized pipeline.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The manufacturing process of chlorine and caustic soda consists of the
electrolysis of sodium chloride brine, which produces free hydrogen, chlorine
and caustic soda in solution. The Company burns the hydrogen for power, and
separates and concentrates the chlorine and caustic soda. The Company combines
chlorine with ethylene to produce ethylene dichloride. Ethylene dichloride is
then &#147;cracked&#148; to produce vinylchloride monomer, which is polymerized to produce PVC. Suspension and emulsion are two of the
commercial methods for polymerizing PVC resin. In the suspension process, a
solution of vinylchloride monomer, catalysts, additives, dispersing agents and
water are agitated and heated for approximately 10 hours, producing a PVC-water
&#147;clay&#148; that is then dried into porous PVC particles. In the emulsion process,
different catalysts, additives and dispersing agents are used, creating a more
homogenous PVC-water &#147;clay&#148; that is similar to latex. The resulting PVC
particles are thinner and more compact than in the suspension process.

</FONT>


<P align="center"><FONT size="2">45</FONT>
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<P align="left"><FONT size="2"><B><I>Production Capacity and Technology of the Vinyls Unit</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the location, main products, production
capacity and tons produced for the years presented for each plant currently in
the Company&#146;s vinyls unit.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="42%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Production</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Production</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Capacity (1)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Year Ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Location (Complex)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Main Products</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>(in tons)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">Cama&#231;ari (Northeastern)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
PVC
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">246,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">200,056</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">173,921</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Cama&#231;ari (Northeastern)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Caustic Soda
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">73,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">68,964</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">70,420</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Chlorine
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">64,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">61,206</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">62,497</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Maceio (Alagoas)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Caustic Soda
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">460,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">370,600</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">331,198</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Chlorine
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">400,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">342,700</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">314,091</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
EDC
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">520,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">443,955</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">393,803</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">Marechal Deodoro (Alagoas)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
PVC
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">204,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">180,870</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">166,882</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Vila Prudente (S&#227;o Paulo)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
PVC
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">25,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">20,654</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">20,932</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Represents annual capacity effective in 2002.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company originally licensed its vinylchloride monomer manufacturing
technology from B.F. Goodrich Company and its PVC technology from Mitsubishi
Chemical Corporation. The Company also has three chlorine manufacturing
technology agreements with Denora (used in Bahia), Eltec (used in Alagoas) and
EVC (to produce ethylene dichloride in Alagoas). The Company no longer pays
license fees under any of the technology licenses used by the Vinyls Unit, and
there is no expiration date for any of the existing licenses used by the Vinyls
Unit. The production processes of the Vinyls Unit are not dependent on any
other licenses or patents from third parties. The Vinyls Unit also owns 11
patents and six trademarks in Brazil related to the Company&#146;s production of
PVC.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>The
Cama&#231;ari Plants.</u> The Company&#146;s original PVC plant and one of its
chlorine and caustic soda plants are located at the Northeastern Complex. The
PVC plant produces a full range of grades of suspension PVC. It commenced
operations in August 1979, with an installed annual production capacity of
150,000 tons of suspension PVC, which the Company has since upgraded to 246,000
tons. The production technology for the Company&#146;s PVC manufacturing process
was supplied by Mitsubishi Chemical Corporation.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s chlorine and caustic soda plant in the Northeastern Complex
commenced operations in March 1979. This plant had an original installed
annual production capacity of 35,700 tons of caustic soda, which the Company
has since expanded to 73,000 tons. The plant&#146;s original installed annual
chlorine production capacity of 31,700 tons has been increased to 64,000 tons.
The plant produces caustic soda and chlorine by electrolysis of sodium chloride
using mercury cells. The facility also has annual production of 78,000 tons of
sodium hypochlorite, 10,500 tons of hydrochloric acid and 1,300 tons of
hydrogen, each of which are feedstocks for second generation producers.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>The
Alagoas Plants.</u> The Alagoas chemical complex was established in 1977
to increase industrial use of caustic soda and chlorine produced from salt
mined in the region by the Company. The Company&#146;s chlorine and caustic soda
plant in Alagoas commenced operations in February 1977, and its PVC plant in
Alagoas commenced operations in January 1989. Current annual effective
production capacity at the Alagoas plants is 204,000 tons of PVC. The Company&#146;s
PVC plant in Alagoas produces a full range of grades of suspension PVC and
annually produces 600,000 tons of ethylene dichloride, 460,000 tons of caustic soda
and 410,000 tons of chlorine. The PVC plant uses Mitsubishi technology, and
the caustic soda and chlorine plants use diaphragm electrolysis.

</FONT>


<P align="center"><FONT size="2">46</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>The
S&#227;o Paulo Plant.</u> The S&#227;o Paulo plant was purchased in 1982 from the
first Brazilian manufacturer of PVC. The plant began operations in 1960 and
has an annual effective production capacity of 25,000 tons of PVC. It produces
small batches of special types of dispersion PVC, including emulsion and
micro-suspension PVC and copolymers. The technology for the production of
dispersion PVC was originally licensed by the Geon Company, but has since been
updated and improved by the Company.
</FONT>
<P align="left"><FONT size="2"><B><I>Maintenance of Vinyls Unit Plants</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has a regular maintenance program for each of its vinyls
plants. The Cama&#231;ari and Alagoas PVC plants are generally shut down for 20
days every two years to allow for regular inspection and maintenance. The S&#227;o
Paulo plant is generally shut down annually for five days of maintenance. The
Company&#146;s caustic soda and chlorine plants are generally shut down for 15&nbsp;days
of maintenance every two years. This program of regularly scheduled
maintenance is standard in the petrochemical industry and does not materially
affect the Company&#146;s ability to produce and deliver its vinyls products on a
timely basis.
</FONT>
<P align="left"><FONT size="2"><B><I>Center for Technology and Innovation</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Vinyls Unit maintains a center for technology and innovation in S&#227;o
Paulo. This center employs five product engineers and five technicians
specializing in plastics and modern equipment that render support services to
customers, develop applications for PVC and train personnel of the Vinyls
Unit&#146;s customers. This center has developed new applications for PVC,
including vertical blinds, coatings for industrial PVC pipes, resins used in
automotive parts and in the manufacture of doors, windows and other building
components.
</FONT>
<P align="left"><FONT size="2"><B><I>Raw Materials of the Vinyls Unit</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Ethylene.</u> The most significant direct cost associated with the production
of PVC and ethylene dichloride is the cost of ethylene, which accounted in 2002
for approximately 58.7% of the Company&#146;s variable cost of PVC sales (60% in
2001) and 77.1% of ethylene dichloride sales (80% in 2001). Braskem&#146;s Basic
Petrochemical Unit supplies all of the ethylene required by the Vinyls Unit.
Ethylene is delivered to the Alagoas plant via a 477-kilometer pipeline that
the Company owns, and the S&#227;o Paulo plant receives vinylchloride monomer by
ship from the plant in the Northeastern Complex. Because the cost of storing
and transporting ethylene and propylene is substantial and there is inadequate
infrastructure in Brazil to permit the importation of infrastructure for large
quantities of ethylene or propylene, the Company&#146;s Vinyls Unit is highly
dependent on ethylene that is supplied by the Basic Petrochemicals Unit. For a
description of the pricing of ethylene, see &#147;&#151;The Basic Petrochemicals
Unit&#151;Sales and Marketing of Basic Petrochemical Products.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Electric
Power.</u> Electric power is a significant cost component in the
production of chlorine and caustic soda. In 2002, electric power accounted for
approximately 45% of the Vinyls Unit&#146;s cost of caustic soda sales and
approximately 18.8% of the Vinyls Unit&#146;s cost of sales (16% in 2001). In 2002,
the Company&#146;s Vinyls Unit used a total of approximately 1,707 GWh of
electricity (1,306 GWh in 2001).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Vinyls Unit obtains some of its electric power requirements from the
Basic Petrochemicals Unit and purchases the remainder of its requirements from
various generators under power purchase agreements. The Vinyls Unit&#146;s caustic
soda plants at Cama&#231;ari and Alagoas and the PVC plant at Cama&#231;ari purchase
their electricity requirements from CHESF. CHESF and CEAL-Companhia Energ&#233;tica
de Alagoas S.A. distribute electricity to the PVC plant in Alagoas. The Vinyls
Unit&#146;s S&#227;o Paulo plant obtains its electricity from Eletropaulo
Metropolitana-Eletricidade de S&#227;o Paulo S.A. The underlying power purchase
agreements are long-term renewable contracts with automatic rolling three-year
extensions. The agreements provide Braskem with the option to purchase its
total electricity requirements, based on an annual estimate. The price terms
of the contracts are based upon tariffs regulated by <I>Ag&#234;ncia Nacional de
Energia El&#233;trica </I>(the Brazilian federal energy regulatory agency, or ANEEL).
</FONT>
<P align="center"><FONT size="2">47</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<DIV align="right"><FONT size="2">36</FONT></DIV>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Salt.</u> The Company used approximately 625,900 tons of salt in 2002 in its
production of chlorine and caustic soda. In 2002, salt accounted for 3.4% of
the Company&#146;s variable costs of caustic soda sales and approximately 1.1% of
the Vinyls Unit&#146;s total cost of sales. The Company pays a small monthly
royalty to the Brazilian government for exclusive salt exploration rights at a
salt mine located near the Alagoas plant. The Company estimates that the mine
has sufficient reserves of salt to last approximately 40 to 50&nbsp;years at current
rates of production. The Company enjoys significant cost advantages when
compared to certain of its competitors due to low extraction costs of rock salt
(particularly as compared to sea salt), low transportation costs due to the
proximity of the salt mine to the Company&#146;s production facility and the higher
purity of rock salt as compared to sea salt.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Other
Utilities.</u> All of the Vinyls Unit&#146;s facilities in the Northeastern
Complex are supplied with other required basic utilities, including steam,
purified and demineralized water, compressed air and nitrogen by the Basic
Petrochemicals Unit. Basic utilities are supplied to the Alagoas PVC plant by
Trikem&#146;s subsidiary, Companhia Alagoas Industrial &#151; Cinal (&#147;Cinal&#148;), which is
owned by the companies operating in the Alagoas complex, including the Company.
Basic utilities not supplied to the Company&#146;s Alagoas PVC plant by Cinal, such
as compressed air and nitrogen, are supplied by the Company itself. The
Alagoas chlorine and caustic soda plants supply their own utilities
requirements. The S&#227;o Paulo plant supplies its own utility requirements.
</FONT>
<P align="left"><FONT size="2"><B>Sales and Marketing of Vinyls Products</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth, for the years ended December&nbsp;31, 2002 and
2001, certain information regarding Trikem&#146;s net sales.
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="37%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="23"><FONT size="1"><B>Year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="23"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Quantities</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Quantities</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>sold</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Net Sales</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>sold</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Net Sales</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(millions</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(millions</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(thousands</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>of U.S.</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(thousands</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>of U.S.</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>of tons)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>dollars)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(%)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>of tons)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>dollars)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(%)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Domestic Sales</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PVC suspension</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">332.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">225.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">55.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">309.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">221.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">51.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PVC emulsion</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Caustic soda</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">400.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">76.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">358.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">132.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">30.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Others (1)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">122.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">26.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">137.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total domestic sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">873.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">344.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">85.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">823.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">387.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">90.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Exports</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">59.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">41.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Total vinyls net sales</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">403.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">428.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Other products include caustic soda
flakes, chlorine, sodium hypochlorite, and
chloridric acid, among others.</FONT></TD>
</TR>
</TABLE>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s Vinyls Unit sells PVC, caustic soda, chlorine, ethylene
dichloride and other products to a concentrated customer base located
principally in southern and southeastern Brazil, which sales accounted for
16.2% and 16% of the Company&#146;s combined net sales revenue for 2002 and 2001,
respectively. The Vinyls Unit&#146;s principal domestic sales and marketing group
is located in the city of S&#227;o Paulo, which enables it to best serve the largest
part of its domestic customer base. The Company&#146;s customers generally are
third generation companies that produce a wide variety of plastic-based
consumer and industrial goods.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Most domestic sales of PVC and caustic soda are made directly to
customers, without the use of third-party distributors.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Vinyls Unit maintains contractual relationships with three
distribution centers located in Paul&#237;nea and Itapevi, both in the State of S&#227;o
Paulo, and Joinville in the State of Santa Catarina. These distribution centers
provide the Vinyls Unit with logistical support. In addition, the Company
operates three warehouse facilities for PVC and six terminal tank facilities for caustic soda strategically located along
the Brazilian coast to enable the Company to deliver its products to its
customers on a &#147;just-in-time&#148; basis.
</FONT>
<P align="center"><FONT size="2">48</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<DIV align="right"><FONT size="2">37</FONT></DIV>

<P align="left"><FONT size="2">The Company&#146;s Vinyls Unit develops its
business through close collaboration with its customers, working together with
them to improve existing products as well as to develop new applications for
PVC. For these purposes, as well as to assist its customers in their research
and development projects, the Company operates a center for technology and
innovation at its S&#227;o Paulo plant. The Company&#146;s marketing and technical
assistance groups also advise customers and potential customers that are
considering the installation of manufacturing equipment for PVC end-products.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company determines the domestic prices for its PVC resins with
reference principally to the prices paid by third generation producers for
imports of PVC plus estimated service charges. The Company&#146;s export price for
PVC is generally equal to the international market price but also takes freight
costs into account. In addition to price, significant factors in the marketing
of PVC resins are delivery, quality and technical service. The Company
establishes its domestic price for caustic soda based upon the international
market price and domestic market prices charged by its three domestic
competitors, taking into account any import duties and freight costs.
Approximately 65% of the Company&#146;s caustic soda sales are effected pursuant to
agreements that are generally for terms of one to three year terms and may
include floor and ceiling prices. As with PVC, the Company&#146;s export prices for
caustic soda and ethylene dichloride are generally determined according to
international market prices, but also take import duties and freight costs into
account.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prices obtained by the Company in the Brazilian market traditionally are
higher than the prices obtained for its exports. The difference in prices
between the Brazilian and export markets results from:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">transportation costs;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">tariffs, duties and other trade barriers;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a premium reflecting the tighter demand/supply relationship in Brazil; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the reliability of supply and technical support that the Company provides.</FONT></TD>
</TR>
</TABLE>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2002, the Vinyls Unit had export net sales of U.S.$59.5&nbsp;million, which
accounted for 14.7% of the Vinyls Unit net sales. In 2002, 50.7% of export net
sales were of PVC, and 49.3% were of ethylene dichloride. The Company does not
export chlorine and did not export caustic soda in 2002. The Company&#146;s vinyls
export sales vary from year to year, influenced principally by domestic market
conditions. The Company has a continuing export obligation related to an
export prepayment facility backed by its export receivables generated under a
supply agreement with Nissho Iwai of Japan (the &#147;Nissho Iwai Supply
Agreement&#148;). Exports under the Nissho Iwai Supply Agreement accounted for 52%
and 84% of the Company&#146;s export net sales of PVC and ethylene dichloride,
respectively, during 2002 (37% and 90% during 2001). Under this supply
agreement, the Company has agreed to supply, and Nissho Iwai has agreed to
purchase, minimum annual volumes of PVC and ethylene dichloride ranging between
21,000 and 24,000 tons of PVC and between 100,000 and 160,000 tons of ethylene
dichloride. Any PVC, ethylene dichloride or caustic soda made available by the
Vinyls Unit for export in excess of these contractual minimums must first be
offered to Nissho Iwai. The Company&#146;s supply agreement with Nissho Iwai
expires on April&nbsp;30, 2004.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company uses a variety of methods of distribution for its exports,
depending on the size of the market in question, including direct sales,
independent distributors, negotiations conducted through trading companies and
sales in the spot market.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company focuses its export sales of PVC principally on the Mercosul
and Southeast Asian markets and to a lesser extent on the United States and
Europe. The Company also sells directly, as well as through local
distributors, to over 20 clients in Mercosul countries. In Asia, the Company
distributes its vinyls products exclusively through Nissho Iwai. The remaining
PVC is sold through third party distributors and on the spot market.
</FONT>
<P align="center"><FONT size="2">49</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2"><B><I>Competition</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Polyvinylchloride.</u> The Company and Solvay are the only two producers of
PVC in Brazil. Solvay&#146;s total Brazilian installed annual production capacity
is estimated to be 250,000 tons as compared to the Company&#146;s annual production
capacity of 475,000 tons. Solvay&#146;s two production facilities are located in
S&#227;o Paulo and therefore are closer in proximity than the Company&#146;s facilities
to the primary PVC market in Brazil. However, the Company believes that its
internal ethylene, ethylene dichloride and vinylchloride monomer production
capabilities, its modern suspension plants, its strong customer service and its
technical assistance programs enable the Company to compete effectively with
Solvay.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company also competes with importers of PVC. Approximately 20% of
Brazil&#146;s total PVC consumption in 2002 was imported (21% in 2001).
Domestically produced PVC is currently competitively priced with imported PVC
after taking into account transportation costs and import duties. In the rest
of South America, the Company&#146;s principal competitor in the PVC market is also
Solvay, which has one plant in Argentina.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company also competes with other producers of thermoplastics that
manufacture the same line of vinyls products or products that compete with the
Company&#146;s vinyls product line. Thermoplastics principally consist of
polyethylene and polypropylene, and are used in certain applications as
substitutes for PVC. Wood, glass and metals also are used in some cases as
substitutes for PVC.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Other
Products.</u> The four largest Brazilian producers of caustic soda
account for approximately 92% of Brazilian production. The Company&#146;s
production share of caustic soda was approximately 38% in 2002 and 2001. The
Company and Dow Chemical operate in this market throughout Brazil, while the
other domestic producers of caustic soda generally operate on a local or
regional basis. In 2002, approximately 30% (25% in 2001) of Brazil&#146;s total
caustic soda consumption was imported. The Company believes that imports of
caustic soda will not increase substantially because of the high cost of
transporting caustic soda, which is usually sold in suspension form. In the
caustic soda market, the Company competes mainly on the basis of price and
timeliness of delivery.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the rest of South America, the Company&#146;s principal competitors in the
caustic soda market are Dow Chemical, Solvay and producers located on the U.S.
Gulf Coast.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Only one other Brazilian company produces ethylene dichloride for third
parties. In
the ethylene dichloride market, the Company competes mainly on the basis of
price and timeliness of delivery.
</FONT>
<P align="left"><FONT size="2"><B>The Business Development Unit</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s Business Development Unit is comprised principally of the
operations conducted by Proppet and Nitrocarbono prior to their mergers with
the Company. Prior to the 52114 Merger on August&nbsp;16, 2002, the only operations
of the Business Development Unit were those formerly conducted by Proppet.
Prior to the Nova Cama&#231;ari Acquisition on July&nbsp;25, 2001, the Company&#146;s Business
Development Unit did not conduct any operations. The results of Proppet are
included in the Consolidated Financial Statements for the periods after July
25, 2001, the date of the Nova Cama&#231;ari Acquisition. The results of
Nitrocarbono are included in the Consolidated Financial Statements for the
periods after August&nbsp;16, 2002, the date of the 52114 Merger. See &#147;History and
Development of the Company&#148; and &#147;Item&nbsp;5. Operating and Financial Review and
Prospects&#151;The Auction, the Nova Cama&#231;ari Acquisition and the Related Party
Mergers.&#148; Historical financial information with respect to the Polyolefins
Unit is set forth in Note 18 to the Consolidated Financial Statements. The
financial information with respect to the Business Development Unit contained
in this section is derived from the financial records of Nitrocarbono for the
period September to December 2002 and financial records of the Company with
respect to its PET business. This financial information and may not be
indicative of the results that the Company&#146;s Business Development Unit will
achieve in the future.
</FONT>
<P align="center"><FONT size="2">50</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s Business Development Unit&#146;s operations are conducted at two
plants located in the Northeastern Complex. One plant produces PET resin and
DMT, and the other plant produces intermediary products including caprolactam,
cyclohexane, cyclohexanone and ammonium sulfate. In addition, the Business
Development Unit manages certain of the Company&#146;s minority equity investments,
principally its investments in Petroflex and Cetrel, and manages its business
development ventures in the energy and environmental areas. Approximately 66%
and 34% of the Business Development Unit&#146;s net sales in 2002 were derived from
the sale of PET and of caprolactam, respectively.
</FONT>
<P align="left"><FONT size="2"><B><I>Products of the Business Development Unit</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following chart shows the major products produced by the Business
Development Unit of the Company and their typical end uses.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Products</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Typical end uses</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">PET</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Packaging for soft drinks, medications and textile fibers</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">DMT</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Used to produce PET and to insulate cables.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Caprolactam</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Textile thread (Nylon-6)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Ammonium sulfate</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Fertilizer</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Cyclohexanone</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Paint solvent, pesticides, natural resins, oils and rubber</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Cyclohexane</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Paint solvent, pesticides, natural resins, oils and rubber</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The production of PET involves two main steps: (1)&nbsp;transesterification of
DMT in the presence of ethylene glycol, generating dihydroxiethyl-terephthalate
(&#147;DHET&#148;) and methanol, which is sent to the DMT plant; and (2)&nbsp;polycondensation
of DHET, which involves the addition of additives and catalysts to accelerate
the polycondensation process. The finished polymer produced by
polycondensation is extruded into strands, which are immersed in water,
transported and fed into a pelletizer. Amorphous chips are fed to the
solid-state polymerization unit to produce bottle-grade polyester chips. The
solid state polymerization process involves hot dedusting and crystallization
to reach the desired intrinsic viscosity for bottle grade application. The hot
PET is discharged from the reactor to the fluidized bed cooler and deduster to
be stored.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The production of caprolactam involves four main steps: (1)&nbsp;production of
cyclohexane through benzene hydrogenation; (2)&nbsp;production of cyclohexanone
through oxidation of cyclohexane; (3)&nbsp;oxidation of cyclohexanone; and (4)
preparation, purification and flaking of caprolactam. Ammonium sulfate is
produced as a by-product. The production of cyclohexanone-oxime involves the
preparation of hydroxylamine phosphate through the reduction of nitrate with
hydrogen.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The production of ammonium sulfate involves the concentration through
evaporation of the ammonium sulfate solution from 40% to 48%. The ammonium
sulfate solution is a by-product of the caprolactam plant. The solution at 48%
feeds a second evaporation unit to obtain a super saturated solution, which
feeds a crystallizer to form ammonium sulfate crystals.
</FONT>
<P align="left"><FONT size="2"><B><I>Production Facilities of Business Development Unit Plants</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Business Development Unit operates two plants, which are owned by the
Company. At December&nbsp;31, 2002, the Business Development Unit&#146;s plants had a
total annual effective capacity to produce 65,000 tons of PET and 62,000 tons
of caprolactam.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The table below sets forth the location, main products, production
capacity and tons produced for the years presented for each of the plants
currently in the Company&#146;s Business Development Unit.
</FONT>
<P align="center"><FONT size="2">51</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="21%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Production (in tons)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Year Ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Production</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Location (Complex)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Main Products</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Capacity</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">Cama&#231;ari (Northeastern)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
PET
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">65,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">59,031</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">56,517</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
DMT
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">80,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">76,899</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">70,378</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">Cama&#231;ari (Northeastern)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
CPL
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">62,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">57,522</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">48,221</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Cyclohenane
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">72,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">69,144</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">63,410</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Cyclehexanone
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">55,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">52,942</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">46,900</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Ammonium sulfate
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">114,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">108,052</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">94,151</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s PET and DMT are produced at one plant located at the
Northeastern Complex that commenced operations in 1999 with an annual installed
capacity of 65,000 tons of PET and 80,000 tons of DMT. The first plant uses
Dupont-Sinco technology for the production of PET and Dynamit Nobel technology
for the production of DMT. The Company&#146;s caprolactam, cyclohexane,
cyclohexanone and ammonium sulfate are produced at another Business Development
Unit plant located at the Northeastern Complex. This plant commenced
operations in 1977 and uses DSM-Stamicarbon technologies in the production of
each of these products.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, the Business Development Unit maintains high-tech research
and development laboratories, which laboratories are staffed with highly
qualified personnel that are trained to assist Braskem&#146;s customers in
identifying ways to develop or improve their production processes or final
products. The Business Development Unit also works in partnership with top
research centers and universities to develop higher-value added products.
</FONT>
<P align="left"><FONT size="2"><B><I>Maintenance of Business Development Unit Plants</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As with the plants of the Basic Petrochemicals Unit, the plants of the
Business Development Unit are maintained in part by CEMAN. See &#147;&#150; Basic
Petrochemicals Unit &#150; Maintenance of Basic Petrochemicals Unit Plants.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Regular plant maintenance usually requires plant shutdowns every two years
and takes approximately 20&nbsp;days to complete. The last general maintenance
shutdown of the caprolactam plant was carried out in April 2003 and lasted 20
days. The cost was approximately U.S.$2.0&nbsp;million. The last general
maintenance shutdown of the Business Development Unit&#146;s DMT and PET plant was
carried out in June 2003. The cost of this maintenance was approximately
U.S.$2.0&nbsp;million.
</FONT>
<P align="left"><FONT size="2"><B><I>Raw Materials of the Business Development Unit</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The most significant direct cost associated with the production of
caprolactam is the cost of benzene, which accounted for approximately 46% of
the Business Development Unit&#146;s variable production costs during 2002. All of
the benzene consumed in the production of caprolactam is supplied by the Basic
Petrochemicals Unit.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The most significant direct cost associated with the production of PET is
the cost of para-xylene, which accounted for approximately 47% of the Business
Development Unit&#146;s variable production costs during 2002 (12% for 2001). All
of the para-xylene consumed in the production of PET is supplied by the Basic
Petrochemicals Unit.
</FONT>
<P align="left"><FONT size="2"><B><I>Sales and Marketing of Business Development Unit Products</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth, for the years ended December&nbsp;31, 2002, and
2001, certain information regarding sales by the Company&#146;s Business Development
Unit for the years indicated.
</FONT>
<P align="center"><FONT size="2">52</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="33%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="23"><FONT size="1"><B>Year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="23"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Quantities</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Quantities</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>sold</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Net Sales</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>sold</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Net Sales</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(thousands of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(millions of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(thousands</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(millions of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>tons)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>U.S. dollars)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(%)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>of tons)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>U.S. dollars)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(%)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Domestic Sales</B>
</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">DMT</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>



<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PET</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">59.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">54.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">58.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">53.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">57.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">90.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Caprolactam</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">46.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">21.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Ammonium sulfate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">112.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">93.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cyclohexane</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cyclohexanone</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total domestic sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">240.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">86.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">93.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">165.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">63.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Exports</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Total net sales</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">92.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">165.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">63.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Business Development Unit sells its products to a highly concentrated
customer base. Five customers accounted for 80% of PET sales during
2002, and 10 customers accounted for 90% of PET sales during the same year. The Business
Development Unit&#146;s caprolactam customer base is even more concentrated. Two
customers accounted for 66% of its sales during 2002.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During 2002, consumption of PET in Brazil for mineral water, tea and fruit
juice bottling increased by 20% and was particularly strong in the soft drink
market. In addition, consumption of PET for packaging of cosmetics and other
beauty products increased substantially during 2002. Similarly, the use of PET
for packaging of cleaning products increased during 2002, as the three
principal competitors in this market (Bombril, Qu&#237;mica Amparo and Minuano)
continued to use PET for producing packaging for liquid detergents.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Business Development Unit is focused on maintaining a strong and close
relationship with its customers, and offers technical support, services and
other programs to its customers in order to provide them with the benefit of
the most recent technological developments. The Business Development Unit also
identifies new business opportunities for Braskem through research and market
analysis in order to enhance product demand.
</FONT>

<P align="left"><FONT size="2"><B><I>Equity Interests</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Business Development Unit also manages certain of the Company&#146;s
minority equity investments, including its investments in Petroflex and Cetrel.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Petroflex.</u> At December&nbsp;31, 2002, the Company owned 20.1% of the total and
voting capital stock of Petroflex, a producer of synthetic rubber. The Company
obtained the following information with respect to Petroflex, which is publicly
traded on the BOVESPA, from publicly available materials. The Company has
relied on the accuracy and completeness of such information for purposes of the
following description of Petroflex but is not responsible in any manner
whatsoever for any such information and has no liability therefor.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Petroflex is the leading producer of synthetic rubber in Latin America and
produces approximately 370 thousand tons of more than 50 types of elastomers
per year. Petroflex operates three plants located in: Duque de Caxias, Rio de
Janeiro; Cabo, Pernambuco; and Triunfo, Rio Grande do Sul. It sells its
products to clients in approximately 60 countries throughout the world.
Petroflex purchases butadiene from the Company from which it produces
styrene-butadiene, polybutadiene, liquid hidroxylated polybutadiene and other
elastomers.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Petroflex was formed in 1976 with Petroquisa as its majority shareholder.
In 1992, as part of the Brazilian government&#146;s efforts to privatize the
Brazilian petrochemical industry, Petroquisa auctioned a portion of its
interest in Petroflex to private investors. At December&nbsp;31, 2002, each of the
Company and Suzano Qu&#237;mica Ltda. owned 20.1% of the voting and total capital stock of Petroflex, Resitec Ind&#250;stria
Qu&#237;mica Ltda. owned 12.8% of Petroflex&#146;s voting stock, and Unipar &#150; Uni&#227;o de
Ind&#250;strias Petroqu&#237;micas S.A. owned 10.1% of Petroflex&#146;s voting capital stock.
</FONT>

<P align="center"><FONT size="2">53</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The major raw materials used in Petroflex&#146;s production process are
butadiene and styrene. Petroflex purchases part of its raw materials
requirements from the Company. Due to high naphtha prices in 2002, the prices
of butadiene and styrene increased by 51% and 71%, respectively, in the
international market. However, the recovery of rubber prices in <I>reais</I>, due to
increases in international prices and the devaluation of the <I>real </I>against the
U.S. dollar, allowed Petroflex to pass on these increased costs to its
customers.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The main customers of Petroflex are manufacturers of tires, shoes,
adhesives and sealants.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 1993, the three industrial plants operated by Petroflex were awarded
ISO 9002 certification. In 1996, Petroflex was awarded ISO 14001 certification
for environmental quality, and in 1999, Petroflex was awarded BS 8800
certification for occupational health and safety.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Cetrel.</u> At December&nbsp;31, 2002, the Company owned 21.1% of the total and
voting capital stock of Cetrel, which provides treatment services for the
wastewater and organic residues generated by the Company in the Northeastern
Complex. The Company obtained the following information with respect to
Cetrel, which is a private company, from publicly available materials. The
Company has relied on the accuracy and completeness of such information for
purposes of the following description of Cetrel but is not responsible in any
manner whatsoever for any such information and has no liability therefor.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cetrel was formed in 1978 as the company responsible for the treatment and
disposal of effluents and industrial residue, as well as for environmental
monitoring of the entire Northeastern Complex. Cetrel has since expanded its
activities to include disposal of solid hazardous waste in special industrial
landfills, incineration of organo-chloric liquid residues and solid hazardous
waste, and environmental monitoring of the air, underground water, soil,
rivers, sea and fauna in and around the Northeastern Complex. Cetrel also
provides environmental engineering services for companies located throughout
Brazil.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cetrel&#146;s main customers are the petrochemical producers in the
Northeastern Complex. Cetrel has entered into strategic alliances with DHV (in
respect of recycling and reuse of water), Lakes Environmental Softwares, Inc.
(in respect of management of residues through the use of specialized software)
and Bolland (in respect of incineration of residues with a low chlorine
content).
</FONT>
<P align="left"><FONT size="2"><B><I>Competition</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Braskem is the only manufacturer of caprolactam in the Mercosul market.
Imports of caprolactam represented only 8% of domestic consumption in 2002.
Although there is a caprolactam plant in Colombia that is focused on the
fertilizers market, it does not pose a significant competitive threat to the
Company.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are two producers of PET in Brazil &#150; the Company and Rhodia. Rhodia&#146;s total annual installed production capacity is
estimated at 290,000 tons, as compared to the Company&#146;s annual
production capacity of 65,000 tons. The Company also competes with importers
of PET. Approximately 35% of Brazil&#146;s total PET consumption in 2002 was
imported (38% in 2001). Although international producers of PET have greater
economies of scales than the Company, the Company is able to compete with these
producers due to the high transportation costs and import duties applicable to
PET imports. The Company&#146;s PET production is aimed at the bottled water
segment of the PET market.
</FONT>
<P align="left"><FONT size="2"><B>Other Equity Investments</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Copesul</u>. At December&nbsp;31, 2002, the Company owned 29.5% of the capital
stock of Copesul, the cracker based in the Southern Complex, as a result of the
OPP Produtos Merger. The Company accounts for its interest in Copesul using
the equity method of accounting as an unconsolidated investment in the
Consolidated Financial Statements.
</FONT>
<P align="center"><FONT size="2">54</FONT>
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<P align="left"><FONT size="2">The Company has obtained the following information with respect to Copesul,
which is publicly traded on the BOVESPA, from publicly available materials.
The Company has relied on the accuracy and completeness of such information for
purposes of the following description of Copesul but is not responsible in any
manner whatsoever for any such information and has no liability therefor.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Copesul is the second largest petrochemical cracker in Brazil based on
production capacity and produces approximately 40% of the national supply of
ethylene. It provides petrochemical feedstocks to second generation producers
located in the Southern Complex, including certain of the Polyolefins Unit&#146;s
plants. Copesul&#146;s manufacturing facility transforms naphtha into basic
petrochemicals, including olefins, such as ethylene, propylene (both polymer
grade and chemical grade) and butadiene, as well as aromatics, such as benzene,
toluene and xylene. These petrochemical products serve as the raw materials
processed by the second generation companies located in the Southern Complex to
produce intermediate petrochemicals including polyethylene, polypropylene and
other resins.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Copesul&#146;s ethylene annual production capacity is 1,135,000 tons per year,
and its annual propylene production capacity is approximately 567,000. In
2002, Copesul produced 1,017,000 tons of ethylene and 515,000 tons of
propylene.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Copesul was formed in 1976 with Petroquisa as its majority shareholder and
commenced operations in 1982. In May 1992, as part of the Brazilian
government&#146;s efforts to privatize the Brazilian petrochemical industry,
Petroquisa auctioned a portion of its interest in Copesul to private investors.
At December&nbsp;31, 2002, a consortium, including the Odebrecht Group and
Ipiranga, owned approximately 58.9% of the capital stock of Copesul, and
Petroquisa owned 15.6% of the capital stock of Copesul.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The principal raw material used in Copesul&#146;s production process is
naphtha, which is currently supplied by Petrobras to Copesul principally
through an underground pipeline connected to the Southern Complex. Although
the price of naphtha increased in 2002, Copesul&#146;s gross margin increased from
14.6% in 2001 to 19.1% in 2002. For a discussion of the impact of naphtha
prices on the petrochemical sector in Brazil, see &#147;&#151;The Brazilian Petrochemical
Industry - Role of the Brazilian Government - <I>Role of Petrobras</I>.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The main customers of Copesul are the second generation companies located
in the Southern Complex. Copesul has long-term supply contracts with its major
customers, including the Company&#146;s Polyolefins Unit. The prices for Copesul&#146;s
products are determined in accordance with a cost margin sharing method. See
&#147;&#151;The Basic Petrochemicals Unit&#151;Sales and Marketing of the Basic Petrochemical
Unit.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2002, net sales and net income were U.S.$967.3&nbsp;million and U.S.$55.5&nbsp;million, respectively.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Copesul is subject to the same federal, state and local environmental laws
and regulations applicable to the Company&#146;s operations at the Southern Complex.
Pursuant to federal, state, and local environmental laws and regulations,
Copesul is required to obtain operating permits for its facilities. <I>Funda&#231;&#227;o
Estadual de Prote&#231;&#227;o Ambiental</I>, the Rio Grande do Sul State environmental
authority, regulates Copesul&#146;s operations by prescribing specific environmental
standards for Copesul in its operating permit, which is renewed annually. In
addition, an on-site governmental officer monitors environmental compliance at
Copesul&#146;s facility.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since December 1999, Copesul has been NBR-ISO 9001, 9002 and 14001
certified. Copesul is also a member of the &#147;Responsible Care&#148; program. The
program&#146;s objective is to combine economic development with the best practices
of environmental protection, occupational health and industrial safety.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Politeno.</u> At December&nbsp;31, 2002, the Company owned 35% of the voting
capital stock, representing 31% of the total capital stock, of Politeno, a
second-generation company operating in the Northeastern Complex. The
Company accounts for its interest in Politeno using the equity method of
accounting as an unconsolidated investment in the Consolidated Financial
Statements. The Company has obtained the following information with respect to
Politeno, which is publicly traded on the BOVESPA, from publicly available
materials. The Company has relied on the accuracy and completeness of such
information for purposes of the following description of Politeno but is not
responsible in any manner whatsoever for any such information and has no
liability therefor.
</FONT>
<P align="center"><FONT size="2">55</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Politeno is the second largest second generation petrochemical company in
Latin America, producing thermoplastic resins &#150; polyethylenes &#150; widely used in
the flexible and rigid packaging industries. Politeno produces low, medium and
high density polyethylene, linear low density polyethylene, linear medium
density polyethylene, ethyl vinyl acetate copolymer &#150; EVA, and other special
resins.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The production facility of Politeno is comprised of two industrial plants,
an LDPE facility and an LPE facility. The LDPE facility is the conventional
low-polyethylene and EVA production facility, with a production capacity of
150,000 tons per year. The LPE facility produces linear polyethylene and has
an annual production capacity of 210,000 tons.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The principal raw materials used in Politeno&#146;s production process are
ethylene and propylene, which are primarily supplied by Braskem. Politeno also
uses butadiene, benzene, toluene and xylene.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Politeno&#146;s principal customers are third generation producers.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Politeno is subject to the same federal, state and local environmental
laws and regulations applicable to the Company&#146;s operations at the Northeastern
Complex. Pursuant to federal, state and local environmental laws and
regulations, Politeno is required to obtain operating permits for its
facilities. The Bahia State environmental authority regulates Politeno&#146;s
operations by prescribing specific environmental standards for Politeno in its
operating permit, which is renewed annually. In addition, an on-site
governmental inspector monitors environmental compliance at Politeno&#146;s
facility.
</FONT>

<P align="left"><FONT size="2"><B>Quality Control</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Braskem&#146;s quality management uses the following norms and regulations as its base:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">ISO 9001/00 and 14,000;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">OHSAS 18,000;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">OSHA; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">&#147;Responsible Care&#148; as implemented by the American Chemistry Council.</FONT></TD>
</TR>
</TABLE>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has instituted systematic improvement processes in its
operational areas, with focus on integration of production, maintenance,
inventory management, client satisfaction and profitability.
</FONT>

<P align="left"><FONT size="2"><B><I>ISO Certifications</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s extensive quality control procedures have enabled it to
obtain ISO 9002 certifications, an internationally recognized quality control
standard, for the following products:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="31%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="17%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="42%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><font size="2">benzene</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
butadiene 1, 2
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">butadiene 1, 3</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">butene-1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
caprolactam
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">chemical grade propilenem</FONT></TD>
</TR>

<TR valign="bottom">
    <td valign="top"><font size="2">coperaf-1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
cyclohexane
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">cyclohexanone</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">D1-hydrogenated CP</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
DCPD
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">dimethyl terephthalate (DMT)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><font size="2">ethylene</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
hydrogen
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">isoprene</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">methane</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
mixed xylenes
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">MTBE</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2">56</FONT>

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<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
<TD width="31%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="39%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">ortho-xylene</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
para-xylene
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">PGH Stream</FONT></TD>
</TR>

<TR valign="bottom">
    <td valign="top"><font size="2">piperlyne</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
polyethylene terephthalate (PET)
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">polymer grade propylene</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Solvent C9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
toluene
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Utilities</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company also has obtained ISO 14001 certifications for the following products:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
<TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="32%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">caustic soda</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
chlorine
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">ethylene dichloride</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">flake caustic soda</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
high density polyethylene
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">hydrochloric acid</FONT></TD>
</TR>

<TR valign="bottom">
    <td valign="top"><font size="2">hydrogen</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
linear low density polyethylene
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">liquid caustic soda (rayon grade)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">polypropylene</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
propylene/ethylene copolymers
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">PVC</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">sodium hypochlorite</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These certifications take into account both the quality of the final
product and the quality of operating procedures. The Company is currently
seeking ISO 14002 certification in respect of the environmental management
systems implemented at its Basic Petrochemicals plants.
</FONT>
<P align="left"><FONT size="2"><B>Insurance</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2002, the Company&#146;s plants were insured against
material damages and consequent business interruption through &#147;All Risks&#148;
policies in an aggregate amount equal to approximately U.S.$3.7&nbsp;billion
(combined material damages and business interruption coverage, subject to
deductibles). Approximately 87% of the Company&#146;s insurance coverage is written
in the London insurance market. The Company&#146;s remaining insurance coverage is
written in the Brazilian insurance market. The Company&#146;s &#147;All Risks&#148; policies
are in force until November&nbsp;30, 2003 and are renewed annually.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The material damages coverage provides insurance for losses due to
material damages such as fire and machinery breakdown. This coverage has a
maximum indemnification limit of U.S.$1.5&nbsp;billion and has a deductible of
U.S.$5.0&nbsp;million. The business interruption coverage provides insurance for
interruptions resulting from stoppages due to any material damage covered by
the policy. This coverage insures against losses of up to U.S.$309.8&nbsp;million
due to stoppages extending beyond 60&nbsp;days. The losses are covered until the
plant and production are re-established, with a maximum indemnity period
ranging from 12 to 24&nbsp;months.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company also has a &#147;third party liability&#148; policy, which covers losses
for damages caused to third parties by the Company&#146;s operations, including
sudden environmental pollution, up to a limit of U.S.$60.0&nbsp;million per loss or
occurrence.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to these policies, the Company has other insurance policies
for specific situations, like directors and officers (D&#038;O) liability, marine
and transport insurance, vehicle insurance and other kinds of coverages that
are not included in the &#147;All Risks&#148; policies.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company does not anticipate having any difficulties in renewing any of
its insurance policies and believes that its insurance coverage is reasonable
in amount and consistent with industry standards in Brazil.
</FONT>
<P align="left"><FONT size="2"><B>Property, Plant and Equipment</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The property, plant and equipment of the Company consist primarily of
petrochemical production facilities in Cama&#231;ari, State of Bahia, in Triunfo,
State of Rio Grande do Sul, in S&#227;o Paulo, State of S&#227;o Paulo and in Macei&#243; and
Marechal Deodoro, State of Alagoas, Brazil. The Company also has equity
interests in companies located in other parts of the country as well as an
administrative support office in Rio de Janeiro, State of Rio de Janeiro,
Brazil. In addition, the Company maintains its corporate headquarters in S&#227;o
Paulo.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the properties of the Company and its main
affiliates by location of facilities and type of business.
</FONT>
<P align="center"><FONT size="2">57</FONT>
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<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="22%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="33%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Name of Company</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Type of Business
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Location of Facilities</FONT></TD>
</TR>
<TR>
    <TD valign="top"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
<HR size="1" noshade>
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Braskem<SUP>(1)</SUP></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Petrochemical and Utilities
Producer
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Cama&#231;ari, Triunfo, Capuava,<BR>
Itatiba, Marechal Deodoro and</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Vila Prudente</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Copene Mon&#244;meros</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Petrochemical
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Cama&#231;ari</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Petroflex</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Producer
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Duque de Caxias</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Tegal</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Petrochemical Products Storage
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Candeias</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Cetrel</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Industrial Residues Treatment
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Cama&#231;ari</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Codeverde</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Land Development
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Irec&#234;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Norcell</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Forestry Management
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Alagoinhas</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Includes Trikem, Polialden, Nitrocarbono, Copene, Proppet and OPP
Qu&#237;mica.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company believes that all of its facilities are in good condition and
are used according to their intended purposes. The Company leases its
headquarters in S&#227;o Paulo and certain other assets that are not material to its
operations. For a description of the capacity of each of the Company&#146;s
industrial facilities, see &#147;&#151;Business Overview.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2002, the consolidated net book value of the Company&#146;s
property, plant and equipment was U.S.$1,183.7&nbsp;million.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain real estate located in the Northeastern Complex (including the DMT
and PET plants and all of the equipment located in these plants) and two of the
Company&#146;s polyolefins plants in the Southern Complex are subject to liens (in
the form of mortgages or pledges) that guarantee certain of the Company&#146;s
financial transactions intended to generate working capital and funds for
capital investments.
</FONT>
<P align="left"><FONT size="2"><B>Environmental Matters</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is subject to Brazilian federal, state and local laws and
regulations governing the discharge of effluents and emissions into the
environment and the handling and disposal of industrial waste or otherwise
relating to the protection of the environment. The Company has obtained all
environmental and other licenses and permits that are required in connection
with the operation of its plants, and all such licenses and permits are
current. The Company believes that its operations are, and will continue to
be, in compliance in all material respects with applicable environmental laws
and regulations currently in effect.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under federal and state environmental laws and regulations, the Company is
required to obtain operating permits for its manufacturing facilities.
Authorities in the State of Rio Grande do Sul, where the Southern Complex is
located, regulate the Company&#146;s operations by prescribing specific
environmental standards in the Company&#146;s operating permits, which must be
renewed annually. State authorities in the State of Bahia issued operating
permits for the Company&#146;s plants in the Northeastern Complex in 2000, which
must be renewed every five years. State authorities in the States of Alagoas
and S&#227;o Paulo have issued permits for the Company&#146;s plants in those respective
complexes, which must be renewed every four years. Environmental standards for
the Company&#146;s plants located in the States of Bahia, Alagoas, Rio Grande do Sul
and S&#227;o Paulo are prescribed and updated by regulation.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All projects for the installation and operation of industrial facilities
in the Northeastern Complex are subject to approval by the Council for
Environmental Protection of the State of Bahia (&#147;CEPRAM&#148;). CEPRAM&#146;s technical
office, the Environmental Resources Center (&#147;CRA&#148;), conducts an analysis of
each project and enforces the State of Bahia&#146;s laws on environmental
protection. The State&#146;s Research and Development Center and other outside
consultants act as technical advisors to the CRA. CEPRAM must approve
installed projects to commence operations and must renew its consent every five
years thereafter. The Company&#146;s environmental license was renewed by CEPRAM in
2000 and is valid until 2005. The Company&#146;s operating permit obligates it to
engage in systematic measures for the treatment of wastewater and hazardous
solid waste.
</FONT>
<P align="center"><FONT size="2">58</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2000, CEPRAM issued an authorization for the construction of new
pipelines between the Port of Aratu and the Company&#146;s plant for the
transportation of raw materials. This project contemplates the prevention and
control of environmental risks through the adoption of measures to prevent and
detect leaks and spillages, as well as their timely detection.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Brazilian government recently enacted an Environmental Crimes Law that
imposes criminal penalties on corporations and individuals causing
environmental damage. Corporations found to be polluting can be fined up to
U.S.$50&nbsp;million, have their operations suspended, be barred from entering into
certain types of government contracts, be required to repair damage they cause,
and lose tax benefits and incentives. Individuals (including corporate
officers and directors) may be imprisoned for up to five years for
environmental violations.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has obtained all environmental and other licenses and permits
that are required in connection with the operation of its plants, and all such
licenses and permits are up to date.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In September 2002, the Company created a Health, Safety and Environment
Committee, composed of leaders of each of the Company&#146;s business units and of
the Company&#146;s management. This Committee supports and monitors the Company&#146;s
environmental, health and safety efforts. In February 2003, the Company&#146;s
Board of Directors approved the Company&#146;s health, safety and environment
policy.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company treats wastewater at Cetrel, a liquid effluents treatment
station collectively owned by all of the companies in the Northeastern Complex,
including the Company, and the State of Bahia. The treatment station also
includes a system for the collection and disposal of wastewater contaminated
with inorganic waste.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, the Company has a contract with Cetrel for the storage and
incineration, treatment and disposal of hazardous solid waste. For other kinds
of solid waste, Cetrel maintains a landfill. The Company also has a contract
with Holdercim Brasil S.A., a company that is part of a Holdersbank, a Swiss
group, to co-process hazardous solid waste in a cement kiln located in the city
of Pedro Leopoldo, State of Minas Gerais.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January 1996, Cetrel obtained its BS 7750 certification (British
Standard), and in September 1996 became one of the first companies in the world
to receive the ISO 14001 certification, an international standard for
environmental control. In 1998, Cetrel obtained certification of its
laboratory by the ISO Guide 25 standards system from the Brazilian Institute of
Metrology and Industrial Quality (&#147;Inmetro&#148;).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2000, the Company adopted the Clean Technologies Program, carried out
in partnership with the Polytechnical School of the Federal University of
Bahia, the State of Bahia Industrial Federation and the Environmental Resources
Center. This program contributes to the development of actions for the
application of clean technologies in industry, such as post-graduate courses in
environmental technologies and the establishment of the regional nucleus for
clean production, a project coordinated by the Brazilian Business Council for
Sustained Development &#150; CEBDS. Braskem is also a signatory to the Charter of
Sustainable Development of the International Chamber of Commerce.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company also signed an agreement for the formulation and
implementation of a system for the prevention of global warming through reduced
atmospheric emissions of pollutants in Brazil, in partnership with Petrobras,
Companhia Vale do Rio Doce and the CEBDS. The Company reduced the atmospheric
emissions of pollutants, including sulphur dioxide and particulate matter,
generated by the Basic Petrochemicals Unit during 2002, as a result of the
better quality fuel that the Company burned in its manufacturing process.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although the Company&#146;s environmental compliance costs have not been
substantial to date, these costs may increase as a result of the projected
increase in its production capacity. In addition, it is possible that as a
result of future regulatory and other developments, the amount and timing of
future expenditures required to remain in compliance with environmental
regulations could increase substantially from their current levels.
</FONT>

<P align="center"><FONT size="2">59</FONT>
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<P align="left"><FONT size="2"><B>Safety</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company participates in the &#147;Responsible Care&#148; program, which
establishes international standards for environmental, occupational health and
safety practices for chemical manufacturers. Participants in this program adopt
policies and procedures that require them to follow detailed instructions in
matters of health, safety and the environment. The Company seeks to maintain
these environmental standards and has qualified its plants for NBR-ISO 9001,
9002 and 14001 certification, which includes internationally prescribed
environmental management practices. The Company is currently seeking NBR-ISO
18000 certification for environmental, health and safety compliance for all of
its plants.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has adopted practices that it believes are consistent with the
best international practices relating to health, safety and the environment.
As a result of its implementation of these practices, the Company has
successfully decreased the aggregate number of workplace accidents involving
its employees and third party service providers working at its facilities. The
following table illustrates the Company&#146;s progress in terms of its safety
record:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="82%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>For the Year Ended</B></FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>December 31,</B></FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Safety Indicator</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001 (1)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Index of Accident Frequency (accidents/200,000 man-hours)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Index of Severity (lost and deducted days/200,000 man-hours)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">21.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">71.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">ABIQUIM average for 2001</FONT></TD>
</TR>
</TABLE>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As shown in the above table, the Company&#146;s safety record ranks above
average for companies in the Brazilian chemical industry. The Company&#146;s safety
policy makes all officers, directors and employees responsible for the safety
of its workers, which has increased levels of awareness throughout the Company.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s safety improvements in 2002 include:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">no significant environmental accidents in 2002;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a 41% reduction in the Company&#146;s rate of accidents causing injuries
requiring a worker to be absent from work, and a 19% reduction in the
Company&#146;s rate of severe accidents, compared to 2001;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the Company&#146;s caprolactam plant in the Northeastern Complex
surpassed three million work-hours without accidents causing injuries
requiring any of the Company&#146;s workers to be absent from work (a total
of 355&nbsp;days);</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the Company&#146;s caustic soda plant in the Northeastern Complex
achieved 1,740&nbsp;days without accidents causing injuries that required
any of the Company&#146;s workers to be absent from work; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">during the annual scheduled maintenance period, the Company&#146;s PVC
plant in Marechal Deodoro, the Company&#146;s caustic soda plant in Macei&#243;,
the Company&#146;s PVC plant in the Northeastern Complex and the Company&#146;s
caprolactam plant in the Northeastern Complex were completely free of
employee accidents.</FONT></TD>
</TR>
</TABLE>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Northeastern Complex is equipped with a fire-fighting safety system.
A 200,000 cubic meter artificial lake, connected to the companies in the
Northeastern Complex by a pumping station and a distribution network and built
in accordance with international safety standards, provides water for
firefighting. Each company in the Northeastern Complex, including the Company,
has emergency equipment and trained safety crews. A safety plan for the
Northeastern Complex provides for firefighting brigades of all companies to
assist in the event of major accidents. The Northeastern Complex has rigorous
safety standards concerning construction density and the design of pipelines
and highways.
</FONT>

<P align="center"><FONT size="2">60</FONT>

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<P align="left"><FONT size="2"><B>Antitrust Matters</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to Law No.&nbsp;8,884/94, any transaction that results in a
concentration of market share equal to or greater than 20% of any relevant
market or that involves any company with annual gross sales of R$400.0&nbsp;million
or more must be submitted to and approved by the Brazilian antitrust
authorities, which consist of three entities: the <I>Conselho Administrativo de
Defesa Econ&#244;mica </I>(the Administrative Council for Economic Defense, or CADE), an
independent body consisting of a president and six members; the <I>Secretaria de
Defesa Econ&#244;mica </I>(the Economic Law Office of the Ministry of Justice, or SDE);
and the <I>Secretaria de Acompanhamento Econ&#244;mico </I>(the Economic Policy Bureau of
the Ministry of Finance, or SEAE). CADE is the antitrust authority ultimately
responsible for reviewing and authorizing transactions that may lead to
economic concentration. SEAE analyzes the economic implications of mergers and
acquisitions, and SDE conducts the principal investigation and analysis,
focusing on the legal aspects of the transaction. As part of the merger review
process, SDE, SEAE and the attorney general of CADE each render preliminary
opinions, which are delivered to the members of CADE. The members of CADE then
render a final decision.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the year ended December&nbsp;31, 2001, the Company&#146;s predecessor,
Copene, had annual gross sales in excess of U.S.$1.8&nbsp;billion. Accordingly, Copene
submitted the terms and conditions of the transactions effected in the Auction
to the Brazilian antitrust authorities on September&nbsp;18, 2001, which will
determine whether the transactions effected in the Auction and the other steps
in the Company&#146;s corporate restructuring process adversely impact competitive
conditions in the relevant markets in which the Company competes or whether
they would negatively affect consumers. Brazilian antitrust law does not
prevent parties from closing a transaction on a provisional basis until the
Brazilian antitrust authorities render a final decision. However, if approved,
the effectiveness of the transaction is retroactive to the date on which the
transaction closed. Although SDE and SEAE have issued non-binding opinions in
July 2002 and May 2003, respectively, recommending the unconditional approval
of these transactions, CADE is still reviewing the matter and may not agree
with those opinions and may not approve these transactions unconditionally.
CADE could impose conditions or performance commitments on the Company. Any
such action could result in a material adverse effect on the results of
operations, financial condition and prospects of the Company.
</FONT>
<!-- link2 "ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS" -->
<DIV align="left"><A NAME="005"></A></DIV>
<P align="left"><FONT size="2"><B>ITEM 5. </B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>OPERATING AND FINANCIAL REVIEW AND PROSPECTS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>The following discussion of the Company&#146;s financial condition and results
of operations should be read in conjunction with the Company&#146;s audited
consolidated financial statements as of December&nbsp;31, 2002 and 2001 and for the
three years ended December&nbsp;31, 2002 and the accompanying notes appearing
elsewhere in this annual report, and in conjunction with the financial
information included under &#147;Item&nbsp;3. Key Information&#151;Selected Financial Data.&#148;</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>This section contains forward-looking statements that involve risks and
uncertainties. The Company&#146;s actual results may differ materially from those
discussed in the forward-looking statements as a result of various factors,
including, without limitation, those set forth in &#147;Cautionary Statement with
Respect to Forward Looking Statements,&#148; those set forth in &#147;Item&nbsp;3. Key
Information&#151;Risk Factors&#148; and the matters set forth in this annual report
generally.</I>
</FONT>
<P align="left"><FONT size="2"><B>Overview</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is the largest petrochemical company in Latin America and one
of the five largest Brazilian industrial companies based on net revenues, with
a diversified portfolio of chemical products, large competitive scale and a
strategic focus on thermoplastics, including polyethylene, polypropylene and
PVC. The Company is the only Brazilian company with integrated first and
second generation petrochemical production facilities, producing 41.4% of the
total volume of olefins, 40.6% of the total volume of polyethylene and
polypropylene, and 66.7% of the PVC, respectively, produced in Brazil during
the year ended December&nbsp;31, 2002. The Company also sells caustic soda and
various other petrochemicals, chlorine and industrial utilities and services,
and holds 29.5% of the capital stock of Copesul, a first generation
petrochemical producer operating in the Southern Complex, and 35% of the voting
capital stock, representing 34.7% of the total capital stock, of Politeno, a
second generation producer of polyethylene and ethylene vinyl acetate.
</FONT>
<P align="center"><FONT size="2">61</FONT>
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<P align="left"><FONT size="2"><B>U.S. GAAP Presentation and Reporting Currency</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s Consolidated Financial Statements have been prepared in
accordance with U.S. GAAP under Statement of Financial Accounting Standards No.
52, &#147;Foreign Currency Translation&#148; (&#147;SFAS 52&#148;). Except as otherwise
specifically indicated, all financial information in this annual report has
been prepared in accordance with U.S. GAAP and presented in U.S. dollars. For
certain purposes, such as filing financial statements with the CVM and
determining dividend payments and other distributions and tax liabilities in
Brazil, the Company has been and will continue to be subject to the
requirements of the Brazilian Corporate Law, and the Company will continue to
prepare its financial statements in Brazil in accordance with the Brazilian
Corporate Law.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has elected to present its financial statements in U.S.
dollars. For this purpose, amounts in Brazilian currency for all periods
presented have been translated into U.S. dollars in accordance with the
methodology set forth in SFAS 52.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although the Company presents its financial statements in U.S. dollars,
the Company&#146;s functional currency is the Brazilian <I>real</I>. Before 1998, the
Company was required under SFAS 52 to use the U.S. dollar as its functional
currency because of the highly inflationary conditions that had been present in
the Brazilian economy. Based on guidelines accepted by the U.S. Securities and
Exchange Commission (the &#147;Commission&#148;), the Company concluded that, as of
January&nbsp;1, 1998, the Brazilian economy no longer had highly inflationary
conditions because the increase in the general price index had been less than
100% over the previous three years. Accordingly, beginning on January&nbsp;1, 1998,
the Company changed its functional currency to the <I>real </I>because, in accordance
with SFAS 52, a company operating in an environment that is not highly
inflationary is obligated to use the currency of its operating environment as
its functional currency.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although the Company adopted the <I>real </I>as its functional currency, the
Company continued to use the U.S. dollar as its reporting currency, which
requires the Company to translate amounts from <I>reais </I>to U.S. dollars in
accordance with SFAS 52. Accordingly, as of December&nbsp;31, 2002 and 2001 and for
each of the three years in the period ended December&nbsp;31, 2002:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">all assets and liabilities have been translated into U.S. dollars
using the applicable year-end rate as published by the Central Bank of
Brazil (2002 - R$3.5333 to U.S.$1.00, 2001 &#150; R$2.3204 to U.S.$1.00);</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">statement of operations and cash flow accounts (including amounts
relative to local currency indexation and exchange variances on assets
and liabilities denominated in foreign currency, which were not
translated prior to 1998) have been translated into U.S. dollars using
the average rate prevailing in the month of the charge or credit to
income; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">capital accounts have been translated at historical rates.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gains and losses resulting from the translation of the financial
statements are included as a component of other comprehensive income in
shareholders&#146; equity, and transaction gains or losses (related to foreign
currency asset or liability) are included in the statement of operations in the
financial income and financial expense accounts. See &#147;&#151;Brazilian Economic
Environment&#151;Inflation and Exchange Rate Variation&#151;Effects of Exchange Rate
Variation.&#148;
</FONT>
<P align="left"><FONT size="2"><B>Critical Accounting Policies</B>
</FONT>

<P align="left"><FONT size="2"><B><I>Discussion of Critical Accounting Policies</I></B></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The presentation of the Company&#146;s financial condition and results of
operation often requires the Company&#146;s management to make judgments regarding the effects
of matters that are inherently uncertain on the carrying value of the Company&#146;s
assets and liabilities. Actual results may differ from those estimated under
different variables, assumptions or conditions. In order to provide an
understanding about how management forms its judgments about future events,
including the variables and assumptions underlying the estimates, and the
sensitivity of those judgments to different variables and conditions, the Company has included
comments related to each of the following critical accounting policies:
</FONT>
<P align="center"><FONT size="2">62</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">revenue recognition and accounts receivable;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">costs and inventory valuation;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">impairment and amortization of permanent assets;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">valuation of long-term investments;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">valuation of derivative instruments;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">pension plans;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">tax incentives;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">deferred taxes; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">contingencies.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><I>Revenue Recognition and Accounts Receivable</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenue for product sales is recognized when risk and title to the product
transfer to the customer, which usually occurs at the time goods are delivered.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The allowance for doubtful accounts is recorded in an amount the Company
considers sufficient to cover any probable losses on realization of its
accounts receivable from the Company&#146;s customers and is included as selling
expenses; no adjustment is made to net sales revenue. In order to establish
the allowance for doubtful accounts, the Company&#146;s management constantly
evaluates the amount and characteristics of the Company&#146;s accounts receivables.
When significant delays occur and the likelihood of receiving these payments
decreases, a provision is made. In case receivables in arrears are guaranteed
or there are reasonable grounds to believe they will be paid, no provision is
made.
</FONT>
<P align="left"><FONT size="2"><I>Costs and inventory valuation</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories are comprised of finished goods, work in process, raw
materials, and materials for consumption. Inventories are recorded at the
lower of average cost or realizable value. Inventories of consumption
materials are classified as current and long-term assets based on the Company&#146;s
estimates of when they will be consumed.
</FONT>
<P align="left"><FONT size="2"><I>Impairment and amortization of permanent assets</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Goodwill and those intangible assets with indefinite lives are subject to
annual impairment tests based on the estimated market values of the related
reporting units and the intangible assets. These assets are not subject to
amortization beginning in January 2002, as a result of the implementation of
Statement of Financial Accounting Standards no. 142.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company performs cash flow studies to determine if the accounting
value of its assets, namely its fixed assets and other intangible assets, is
compatible with the profitability resulting from the respective business units.
If the expected cash flows are lower than the accounting value, the asset will
be subject to a provision for impairment.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fixed assets and certain intangible assets are regularly recognized as
expenses through depreciation, depletion or amortization. The rates of
depreciation, depletion or amortization are based on management or third-party
estimates of the periods over which these assets can be expected to provide
benefits to the Company.
</FONT>
<P align="center"><FONT size="2">63</FONT>
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<P align="left"><FONT size="2"><I>Valuation of long-term investments</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investments of a permanent nature are recorded at cost or under the equity
method, depending on the degree of influence over their operations. These
investments are not required to be reduced to their market value, unless the
loss in value is believed to be other than temporary, which the Company
currently believes not to be the case.
</FONT>
<P align="left"><FONT size="2"><I>Valuation of derivative instruments</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company utilizes swaps, forwards, options and other derivative
instruments to manage the Company&#146;s risks relating to variations in foreign
exchange rates and interest rates. These instruments are recorded at their
estimated fair value, based on market quotations for similar instruments and
assumptions as to future foreign exchange and interest rates.
</FONT>
<P align="left"><FONT size="2"><I>Pension plans</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With respect to the Company&#146;s obligations as sponsor of defined benefit
pension plans, the Company relies on calculations performed by independent
actuaries, based on assumptions provided by the Company. The primary
assumptions include interest rates, investment returns, levels of inflation,
mortality rates and future employment levels. These assumptions affect the
Company&#146;s liability for accrued pension costs and the amounts the Company is
required to provide each year as the Company&#146;s pension cost.
</FONT>
<P align="left"><FONT size="2"><I>Deferred taxes</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company recognizes deferred tax assets and liabilities based on the
differences between the financial statement carrying amounts and the tax basis
of assets and liabilities, as well as tax loss carry forwards. The Company
regularly reviews the deferred tax assets for recoverability and establishes a
valuation allowance, as required, based on historical taxable income, projected
future taxable income, and the expected timing of the reversals of existing
temporary differences. In the event the Company or one of its subsidiaries
operate at a loss or is unable to generate sufficient future taxable income, or
if there is a material change in the actual effective tax rates or time period
within which the underlying temporary differences become taxable or deductible,
the Company evaluates the need to adjust the balance of the valuation allowance
for the Company&#146;s deferred tax assets.
</FONT>
<P align="left"><FONT size="2"><I>Contingencies</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is currently involved in certain legal and administrative
proceedings that arise from the Company&#146;s normal course of business, as
described in Note 13(b) to the Company&#146;s consolidated financial statements.
Some of these proceedings involve amounts that are material to the financial
statements. The Company believes that the extent to which these contingencies
are recognized in the Company&#146;s financial statements is adequate.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is the Company&#146;s policy to record accrued liabilities for contingencies
that are deemed probable of creating a material adverse impact on the result of
its operations or its financial condition.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is also involved in several legal and administrative
proceedings, which are aimed at obtaining or defending its legal rights with
respect to tax legislation, which the Company believes to be unjust or
unconstitutional. The Company considers these issues to be contingent gains,
which the Company does not recognize in the financial statements until the
contingency has been resolved. When the Company has been granted the temporary
right not to pay the disputed amounts or to offset disputed amounts that have
already been paid against current tax obligations, the Company continues to
maintain a liability for the disputed amounts until the contingency has been
resolved. The Company also accrues arrears interest on the liability, using
the applicable interest rate defined in the tax law.
</FONT>
<P align="center"><FONT size="2">64</FONT>
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<P align="left"><FONT size="2"><B>The Auction, the Nova Cama&#231;ari Acquisition and the Related Party Mergers</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;25, 2001, Nova Cama&#231;ari acquired ESAE in an auction conducted by
the Central Bank. ESAE&#146;s principal asset consisted of 56.3% of the capital
stock, representing 63.8% of the voting stock, of Conepar, a Brazilian holding
company, the principal assets of which were 42.6% of the capital stock,
representing 66.7% of the voting stock, of Polialden and 31% of capital stock,
representing 35% of the voting stock, of Politeno. In connection with the
auction, Nova Cama&#231;ari also acquired:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">all of the capital stock of Intercapital, the principal asset of
which was 31.9% of the capital stock, representing 36.2% of the voting
stock, of Conepar; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">100% of the capital stock of Proppet.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To finance these acquisitions, Nova Cama&#231;ari incurred U.S.$573.5&nbsp;million
in indebtedness. On July&nbsp;25, 2001, the Company&#146;s predecessor, Copene, acquired
Nova Cama&#231;ari for U.S.$40 (forty dollars). As a result, Copene held indirectly
all of the capital stock of Proppet, 66.7% of the voting capital of Polialden
and 35% of the voting capital of Politeno. In September 2001:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Nova Cama&#231;ari acquired the capital stock of Conepar that it did not
already own from BNDESPAR for U.S.$62.0&nbsp;million; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Copene merged with Nova Cama&#231;ari, Intercapital and Proppet.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On August&nbsp;16, 2002, OPP Produtos and 52114 Participa&#231;&#245;es merged with and
into the Company. As a result, the Company, directly and indirectly, acquired
all of the voting capital stock of OPP Qu&#237;mica, 64.4% of the voting capital
stock of Trikem, 92.3% of the voting capital stock of Nitrocarbono and 29.5% of
the voting capital stock of Copesul. Prior to the Related Party Mergers, ODB
owned all of the voting capital stock of OPP Produtos, and Pronor owned all of
the voting capital stock of 52114 Participa&#231;&#245;es. In connection with the
Related Party Mergers, the Company issued shares representing 43.7% of its
voting capital stock to ODB, a member of the Odebrecht Group, and shares
representing 3.6% of its voting capital stock to Pronor, a member of the
Mariani Group.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Following the Related Party Mergers:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the Odebrecht Group owned 44.6% of the voting capital stock of the
Company and owned 39.8% of the voting capital stock of Norquisa, the
principal asset of which is 30.8% of the voting capital stock of the
Company; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the Mariani Group owned 3.6% of the voting capital stock of the
Company and owned 16.1% of the voting capital stock of Norquisa.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February 2003, the Company completed a public tender offer in Brazil
for the shares of Nitrocarbono not owned by the Company. As a result of this
tender offer, the Company owned more than 99.9% of the voting capital stock of
Nitrocarbono. On March&nbsp;31, 2003, Nitrocarbono, OPP Qu&#237;mica and ESAE merged
with and into the Company.
</FONT>
<P align="left"><FONT size="2"><B><I>Accounting Aspects</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For purposes of financial statements prepared in accordance with the
Brazilian Corporate Law, the Company accounted for the acquisition of each of
Nova Cama&#231;ari, OPP Produtos and 52114 Participa&#231;&#245;es under the purchase method
of accounting as of the respective date of each acquisition. Under this
accounting method, the recorded assets and liabilities of Nova Cama&#231;ari, OPP
Produtos and 52114 Participa&#231;&#245;es were transferred to the Company&#146;s consolidated
financial statements at their historical amounts, and goodwill was recognized
for the difference between the purchase price and the net acquired assets. For
purposes of U.S. GAAP, the Company also accounted for the Nova Cama&#231;ari
Acquisition and the 52114 Merger under the purchase method of accounting as of
the respective date of each acquisition. However, as a result of the common control exercised
by the Odebrecht Group over the Company and OPP Produtos prior to the OPP
Produtos Merger, in accordance with U.S. GAAP, the Company accounted for the
acquisition of OPP Produtos in a manner similar to a pooling-of-interests as if
this acquisition had occurred on July&nbsp;25, 2001, the date of the Nova Cama&#231;ari
Acquisition and the date on which such common control had commenced. As a
result:
</FONT>
<P align="center"><FONT size="2">65</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the consolidated balance sheets of the Company as of December&nbsp;31,
2001 included in the Consolidated Financial Statements reflect the
inclusion of the assets and liabilities acquired and assumed by the
Company in the Nova Cama&#231;ari Acquisition and the OPP Produtos Merger;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the consolidated balance sheets of the Company as of December&nbsp;31,
2002 included in the Consolidated Financial Statements reflect the
inclusion of the assets and liabilities acquired and assumed by the
Company in the Nova Cama&#231;ari Acquisition, the OPP Produtos Merger and
the 52114 Merger;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the consolidated statement of operations and cash flow accounts of
the Company for the year ended December&nbsp;31, 2000 included in the
Consolidated Financial Statements reflect solely the operations and
cash flows of Copene and its consolidated subsidiaries for such year;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the consolidated statement of operations and cash flow accounts of
the Company for the year ended December&nbsp;31, 2001 included in the
Consolidated Financial Statements reflect the operations and cash flows
of the entities acquired in the Nova Cama&#231;ari Acquisition and the OPP
Produtos Merger for the period on and after July&nbsp;25, 2001; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the consolidated statement of operations and cash flow accounts of
the Company for the year ended December&nbsp;31, 2002 included in the
Consolidated Financial Statements reflect the operations and cash flows
of the entities acquired in the Nova Cama&#231;ari Acquisition and the OPP
Produtos Merger for such year and the operations and cash flows of the
entities acquired in the 52114 Merger for the period on and after
August&nbsp;16, 2002.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><B>Business Segments and Presentation of Segment Financial Data</B>

</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2002, the Company created an organizational structure that it believes
best reflects its business activities and corresponds to its principal products
and production processes. The Company reports its results by market segment to
reflect this organizational structure:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Basic Petrochemicals &#150; This segment includes the Company&#146;s basic
petrochemical production activities and its supply of electricity,
steam and compressed air to second generation producers, including
certain producers owned or controlled by the Company, in the
Northeastern Complex, and consists of operations historically conducted
by Copene, the Company&#146;s predecessor;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Polyolefins &#150; This segment includes the Company&#146;s activities
related to the production of polyethylene and polypropylene and
ancillary petrochemical derivatives and consists of the operations
historically conducted by OPP Qu&#237;mica and by Polialden;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Vinyls &#150; This segment includes the Company&#146;s activities related to
the production of PVC, caustic soda and chlorine and consists of the
operations historically conducted by Trikem; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Business Development &#150; This segment includes the Company&#146;s
activities related to the production of other second generation
petrochemical products, principally the operations historically
conducted by Nitrocarbono and Proppet, and the management of certain of
its minority equity interests, principally its investments in Petroflex
and Cetrel.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company reports its business segment data in its U.S. GAAP financial
statements in accordance with SFAS No.&nbsp;131, &#147;Disclosures about Segments of an
Enterprise and Related Information&#148; (&#147;SFAS 131&#148;). SFAS
131 requires that segment data be presented on the basis of the internal information
that is used by management for assessing performance and making operating
decisions, including decisions regarding the allocation of resources among
segments. Because the Company evaluates and manages segment performance based
on information generated from its statutory accounting records which are
maintained in accordance with the Brazilian Corporate Law, the segment data
included in the Company&#146;s U.S. GAAP financial statements is presented under the
Brazilian Corporate Law accounting principles, with certain exceptions related
to the dates when the acquired companies are included in the consolidation.
</FONT>
<P align="center"><FONT size="2">66</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The segment financial information presented in this section has been
translated from <I>reais </I>into U.S. dollars at the average rate for each period
presented. Intersegment net revenues related to transfers of basic
petrochemicals and other products were recorded at market prices.
</FONT>
<P align="left"><FONT size="2"><B>Demand for the Company&#146;s Products</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because of the Company&#146;s large market share in many of the markets in
which its petrochemical products are sold, fluctuations in Brazilian consumer
demand affect the Company&#146;s production levels and net sales revenues.
Brazilian gross domestic product grew at a compound average annual rate of 2.1%
from 1990 through 2002. During the corresponding period, Brazilian consumption
of polyethylene, polypropylene and PVC grew at an average compound rate of
7.7%, with (1)&nbsp;average consumption growth of polyethylene increasing at a
compound average annual rate of 6.5%, (2)&nbsp;average consumption growth of
polypropylene increasing at a compound average annual rate of 11.7% and (3)
average consumption growth of PVC increasing at a compound average annual rate
of 6.1%. Demand for the Company&#146;s petrochemical products has historically
demonstrated a high degree of elasticity, generally growing at three to four
times the rate of growth of Brazil&#146;s gross domestic product.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company anticipates that growth in demand for its petrochemical
products will continue due to (1)&nbsp;increasing consumption of plastic-based
consumer products, (2)&nbsp;the trend towards substitution of traditional packaging
materials, such as glass and paper, with plastics, (3)&nbsp;general economic growth
in Brazil and (4)&nbsp;broader income distribution in Brazil. However, the
Company&#146;s estimates about market trends and economic growth may turn out to be
incorrect.
</FONT>
<P align="left"><FONT size="2"><B>Cyclicality Affecting the Petrochemical Industry</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consumption of the petrochemical products manufactured by the Company has
increased significantly over the past 30&nbsp;years. Due to this growth in
consumption, producers have experienced alternating periods of insufficient
capacity for these products. Periods of insufficient capacity, including some
due to raw material shortages, have usually resulted in increased selling
prices and operating margins. These periods have often been followed by
periods of capacity additions, which have resulted in declining capacity
utilization rates, selling prices and operating margins.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company expects that these cyclical trends in selling prices and
operating margins relating to capacity shortfalls and additions will likely
persist in the future, principally due to the continuing impact of four general
factors:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">cyclical trends in general business and economic activity produce
swings in demand for petrochemicals;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">when demand is falling, the high fixed cost structure of the
capital intensive petrochemicals industry leads producers to compete
aggressively on price in order to maximize capacity utilization;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">significant capacity additions, whether through plant expansion or
construction, can take two to three years to come on-stream and are
therefore necessarily based upon estimates of future demand; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">as competition in these products is focused on price, being a
low-cost producer is critical to profitability. This favors the
construction of larger plants that maximize economies of scale but also
leads to major increases in capacity that can outstrip current growth
in demand.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">67</FONT>
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<P align="left"><FONT size="2"><B>Sales of the Company&#146;s Products</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2002, sales of by the Basic Petrochemicals Unit, the Vinyls Unit, the
Polyolefins Unit and Business Development Unit represented 45.3%, 15.8%, 35.1%
and 3.8%, respectively, of the Company&#146;s net revenue on a combined basis. In
2002, the Company sold approximately 77% of its petrochemical products in
Brazil and 23% to foreign customers. Exports to other countries in the
Americas accounted for 69% of the Company&#146;s export sales, with the remainder of
the Company&#146;s exports being sold in Europe (12%), in Asia (15%) and in Africa
(4%).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2002, sales of the Company&#146;s petrochemical products increased as
compared to 2001, despite the economic difficulties faced by Brazil and other
Latin American countries caused by, among other factors, the uncertainty prior
to and immediately following Brazil&#146;s October 2002 presidential elections, and
the stoppage for 92&nbsp;days in 2002 of the pyrolysis plant that is part of the
Olefins 1 Unit operated by the Basic Petrochemicals Unit for scheduled
maintenance and expansion of this facility. As a result, the Company&#146;s
shipments of petrochemical products increased in 2002 by 1.9% as compared to
2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The utilities business within the Basic Petrochemicals Unit consists of
the production of electricity, steam, compressed air and treated water for sale
to second generation petrochemical producers in the Northeastern Complex,
including those owned by the Company, and represented 9.5% of the Basic
Petrochemicals Unit&#146;s net sales in 2002.
</FONT>
<P align="left"><FONT size="2"><B>Pricing of the Company&#146;s Products</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Historically, pricing of the Company&#146;s products has been influenced by,
among other factors, the following:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">international prices for petrochemical products, which are
significantly influenced by industry capacity utilization rates and by
significant increases in capacity in the industry;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">demand for petrochemical products as a result of the level of
growth of the Brazilian economy and the economics of other South
American countries;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">fluctuations in the exchange rate between the <I>real </I>and the U.S. dollar; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">economic conditions in Brazil and other South American countries, including prevailing inflation rates.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company negotiates the <I>real </I>prices for certain of its products,
principally polyethylene, polypropylene and PVC, on a monthly basis with its
customers. The Company attempts to revise its prices to reflect changes in the
international market prices of these products and the appreciation or
depreciation of the <I>real </I>against the U.S. dollar. However, during periods of
high volatility in either international market prices or the exchange rate, the
Company is sometimes unable to reflect these changes fully in its prices.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Basic
Petrochemical Products.</U> Prices for ethylene produced by the Company
are calculated based on a margin sharing system. See&#147;&#151;The Basic Petrochemicals
Unit&#151;Sales and Marketing of Basic Petrochemical Products.&#148; The margin for the
whole ethylene chain is calculated and split between the Company and its
customers in proportion to the cost of investments of each company in the
chain. Under this formula, the Company shares the benefit or burden of higher
or lower prices for ethylene derivatives, such as polyethylene, with its
customers. Conversely, the Company also shares the benefit or burden of lower
or higher naphtha prices with its customers.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company calculates the monthly price of propylene by multiplying the
monthly ethylene price that it charges (including Brazilian taxes) by the ratio
of the European contract price for propylene to the European contract price for
ethylene. The price of butadiene is determined by using the European contract
price and, unlike prices for the Company&#146;s other products, includes freight
costs.
</FONT>
<P align="center"><FONT size="2">68</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Other
Products.</u> The prices of the products of the Company&#146;s Polyolefins
Unit, Vinyls Unit and Business Development Unit generally trade on the basis of
prices determined in highly competitive markets. Nevertheless, the Company
generally obtains higher prices in Brazil for these products than the prices it
obtains when it export its products. The difference in prices between the
Brazilian and export markets results principally from:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">higher transportation costs in Brazil; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">tariffs and duties.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, the Company is an integrated producer of caustic soda,
chlorine and PVC, and the Vinyls Unit is able to benefit from gains achieved
through countercyclical pricing of its vinyls products. When a strong
international demand for PVC exists, thereby resulting in higher prices for
PVC, the Company and other producers in the PVC production chain produce
surplus volumes of EDC, resulting in lower prices for EDC. Conversely, when
lower international demand for PVC exists, thereby depressing the price of PVC,
less EDC is produced, permitting the Company to realize higher prices for EDC.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prices for caprolactam produced by the Company&#146;s Business Development Unit
generally fluctuate in accordance with international market prices, but because
the Company sells approximately 80% of its caprolactam production to one
customer, it has generally been unable to assess any material premium over the
prevailing international market price on sales of caprolactam.
</FONT>
<P align="left"><FONT size="2"><B>Cost of Sales and Services</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Historically, the Company&#146;s costs for certain raw materials, principally
naphtha, ethylene and propylene, and the costs of certain catalysts required in
the Company&#146;s production processes, have been incurred in U.S. dollars or are
U.S. dollar-linked. Other costs of production, consisting primarily of other
raw materials, principally salt used in the vinyls segment, labor, energy and
depreciation costs, are incurred in <I>reais</I>. Approximately 77% of the Company&#146;s
costs and operating expenses are denominated in U.S. dollars or are U.S.
dollar-linked, with the remaining 23% denominated in <I>reais</I>.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s cost of naphtha, the primary raw material used in the
production of the Company&#146;s basic petrochemical products, represented
approximately 66% and 70% of the Company&#146;s cost of sales for 2002 and 2001 on a
combined basis giving effect to the Nova Cama&#231;ari Acquisition and the Related
Party Mergers as if they had occurred on January&nbsp;1, 2000 and including naphtha
purchased by the Company&#146;s Basic Petrochemicals Unit and naphtha used to
produce the ethylene that the Company&#146;s Polyolefins Unit purchases from
Copesul. The cost of naphtha, varies in accordance with international market
prices, which fluctuate depending upon the supply and demand for oil and other
refined petroleum products. Prior to August&nbsp;9, 2000, the Company was required
under Brazilian law to purchase all of its naphtha requirements from Petrobras,
and naphtha prices were established monthly by Petrobras. During this period,
Petrobras established naphtha prices on a monthly basis based upon a pricing
formula that took into account international oil prices and the costs to import
naphtha into Brazil. The formula itself was memorialized in a federal
government document prepared by the Finance and Energy Ministries and signed by
the Brazilian President.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Beginning on August&nbsp;9, 2000, the Brazilian government implemented a policy
of free naphtha price negotiation and permitted the Company to purchase naphtha
from suppliers other than Petrobras. The Company has entered into a 10-year
renewable contract with Petrobras under which the prices it pays Petrobras for
naphtha in any month are established based on the average ARA quotations for
naphtha in U.S. dollars during the previous month converted into <I>reais </I>at the
U.S. dollar/<I>real </I>exchange rate in effect on the last day of the previous month.
In addition, the Company imports naphtha through its terminal at Aratu under
short-term contracts and spot market purchases. The prices for naphtha under
these contracts are established based on ARA quotations as well.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ethylene is the primary raw material used by the Polyolefins Unit in the
production of polyethylene is produced by the Basic Petrochemicals Unit and by
Copesul. The Company&#146;s cost of ethylene purchased from Copesul represented
approximately 52% and 56% of the Company&#146;s cost of sales for 2002 and 2001 on a
combined basis giving effect to the Nova Cama&#231;ari Acquisition and the Related Party
Mergers as if they had occurred on January&nbsp;1, 2000. The cost of ethylene is
subject to the margin sharing system discussed above under &#147;&#151;Pricing of the
Company&#146;s Products&#151;Basic Petrochemicals Products.&#148; As a result, the price for
ethylene is significantly affected by international market prices for naphtha.
The cost of propylene, the primary raw material used by the
Polyolefins segment
in the production of polypropylene, is also significantly affected by
international market prices as discussed above under &#147;&#151;Pricing of the Company&#146;s
Products&#151;Basic Petrochemical Products.&#148;
</FONT>
<P align="center"><FONT size="2">69</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company obtains salt, the primary raw material used by the Vinyls
segment, from mines it operates in the State of Alagoas. The Company estimates
that its salt reserves are sufficient to produce chlorine (with which it
produces EDC) at expected rates of production for in excess of 50&nbsp;years.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s energy cost represented approximately 2.5% and 2.2% of the
Company&#146;s cost of sales for 2002 and 2001, respectively, on a combined basis
giving effect to the Nova Cama&#231;ari Acquisition and the Related Party Mergers as
if they had occurred on January&nbsp;1, 2001. In particular, the Company&#146;s vinyls
segment has significant electricity requirements. CHESF supplies electricity to
the Company under a long term contract expiring in 2007. Copel, an electricity
distributor in southern Brazil serving the State of Rio Grande do Sul, supplies
electricity to the Company under a contract expiring in December 2003.
Tractabel, an electricity distributor in southern Brazil serving the State of
Rio Grande do Sul, supplies electricity to the Company under a long-term
contract expiring in 2007. Eletropaulo Metropolitana&#150;Eletricidade de S&#227;o Paulo
S.A. (&#147;Eletropaulo&#148;), the electricity distributor in the City of S&#227;o Paulo,
supplies electricity to the Company under a one-year renewable contract.
Following the expiration of its power purchase agreement with Copel, the
Company will purchase all of its electricity needs in southern Brazil from
Tractabel under its existing contract. The Company generates all of its
electricity requirements for its operations in the Northeastern Complex and
sells the excess electricity that it generates to other second generation
producers in the Northeastern Complex.
</FONT>
<P align="left"><FONT size="2"><B>Capacity Utilization</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s operations are capital intensive. Accordingly, to obtain
lower unit production costs and maintain adequate operating margins, the
Company seeks to maximize the capacity utilization rate at all of its
production facilities. On a pro forma basis, giving effect to the Nova
Cama&#231;ari Acquisition and the Related Party Mergers as if they had occurred on
January&nbsp;1, 2001, the Company&#146;s average capacity utilization was approximately
86% in 2002 and 81% in 2001. Two recognized petrochemical industry consultants
project that demand for thermoplastic products over the next few years will
result in an increase of capacity utilization to approximately 90%.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The table below sets forth capacity utilization with respect to certain of
the Company&#146;s principal products for the years ended December&nbsp;31, 2002 and 2001
on a combined basis, giving effect to the Nova Cama&#231;ari Acquisition and the
Related Party Mergers as if they had occurred on January&nbsp;1, 2001.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="68%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Ethylene</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">82</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">89</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Propylene</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">79</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">83</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Polyethylene</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">78</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">73</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Polypropylene</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">92</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">84</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PVC</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">84</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">76</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PET</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">87</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">91</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2"><B>Equity Investments</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company owns 29.5% of the capital stock of Copesul. The Company records
its proportional interest in the net income (loss)&nbsp;of Copesul as equity in
earnings of affiliates, net in its income
statement. The Company accounts for its equity investment in Copesul in affiliated companies.
In addition, certain of the plants in the Company&#146;s
Polyolefins Unit purchase ethylene and propylene from Copesul under long-term
contracts.
</FONT>
<P align="center"><FONT size="2">70</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company owns 35% of the voting capital stock, representing 34.7% of
the total capital stock, of Politeno. The Company records its proportional
interest in the net income (loss)&nbsp;of Politeno as equity in earnings of
affiliates, net in its income statement. The Company accounts
for its equity investment in Copesul in affiliated companies. In addition, the Company&#146;s Basic Petrochemicals Unit sells ethylene
and propylene to Politeno under long-term contracts.
</FONT>
<P align="left"><FONT size="2"><B>Brazilian Economic Environment</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a Brazilian company with substantially all of its operations in Brazil,
the Company is significantly affected by economic and social conditions in the
country. In particular, the Company&#146;s results of operations and financial
condition are impacted by the growth rate of Brazil&#146;s gross domestic product.
See &#147;&#151;Gross Domestic Product.&#148; The Company&#146;s results of operations and
financial condition are also affected by the rate of Brazilian inflation and
the rate of depreciation of the <I>real </I>against the U.S. dollar. See &#147;&#151;Inflation
and Exchange Rate Variation.&#148;
</FONT>
<P align="left"><FONT size="2"><B><I>Gross Domestic Product</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After several years of steady economic growth following the introduction
of the Real Plan in 1994, the Brazilian economy entered into a downturn in late
1998 that was exacerbated by a significant currency devaluation beginning in
mid-January 1999. As a result, gross domestic product, or GDP, grew in
constant terms by 0.2% in 1998 and by 0.8% in 1999.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The recovery of the Brazilian economy in 1999, in the wake of the 32.4%
devaluation of the <I>real </I>against the U.S. dollar and the strong fiscal
adjustment produced by the public sector, led to enhanced consumer confidence.
In 2000, GDP in Brazil grew by 4.4%. GDP in Brazil increased by 1.4% in 2001,
principally as a result of an electric energy shortage in Brazil, decreased
consumer confidence following the Argentine crisis and the aftermath of the
September 2001 terrorist attacks in the United States.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Brazilian
average consumption of the Company&#146;s second-generation products decreased
by 1.5% in 2001 as compared to average consumption of such products in 2000
because many of the Company&#146;s customers were required to reduce the scope of their
operations as a result of energy rationing in Brazil during 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2002, GDP in Brazil increased by 1.5%. GDP growth in Brazil was
inhibited in 2002 due to the economic uncertainties surrounding Brazil&#146;s
October 2002 presidential elections and other factors. However, in 2002,
average consumption of the Company&#146;s products increased by 3.1% over the
depressed 2001 levels and 1.6% over 2000 levels.
</FONT>
<P align="left"><FONT size="2"><B><I>Inflation and Exchange Rate Variation</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to July 1994, Brazil had for many years experienced high and
generally unpredictable rates of inflation and steady devaluation of its
currency relative to the U.S. dollar. Since the introduction of the <I>real </I>as
the new Brazilian currency in July 1994, inflation has remained relatively low
compared to historical periods.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth, for the years shown, Brazilian inflation
and the devaluation of the <I>real </I>against the U.S. dollar as measured by
comparing the daily exchange rates published by the Central Bank on the last
day of each year:
</FONT>
<P align="center"><FONT size="2">71</FONT>

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<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>Year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="19"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1999</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1998</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Inflation (1)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25.3</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.4</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.9</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20.1</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.8</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Inflation (deflation) (2)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.9</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.1</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.4</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.6</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1.8</FONT></TD>
    <TD nowrap><FONT size="2">%)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Nominal depreciation
of the
<I>real </I>against the U.S
dollar</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">34.3</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15.7</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.5</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">32.4</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.6</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(1)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Based on the <I>&#205;ndice Geral
de Pre&#231;os - Mercado </I>(the Brazilian General
Price Index&#151;Market, or IGP-M) published by the <I>Funda&#231;&#227;o Get&#250;lio Vargas</I>, or
the Get&#250;lio Vargas Foundation.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(2)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Based on the <I>&#205;ndice de Pre&#231;os ao Consumidor </I>(the Brazilian Consumer Price
Index, or IPC) published by <I>Funda&#231;&#227;o Instituto de Pesquisas Econ&#244;micas</I>, or
the Economic Research Institute Foundation.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inflation and exchange rate variations have, and may continue to,
substantially effect the Company&#146;s financial condition and results of
operations as well as the reported value of the Company&#146;s assets and
liabilities in U.S. dollars.
</FONT>
<P align="left"><FONT size="2"><I>Effects of inflation</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Before January&nbsp;1, 1998, Brazil was considered to be a highly inflationary
economy. For periods before January&nbsp;1, 1998, the Company translated its
financial statements into U.S. dollars from financial statements presented in
<I>reais, </I>in accordance with the provisions of SFAS 52. Under the financial
statement procedures adopted by the Company for these periods, the Company
translated non-monetary items (inventories, property, plant and equipment and
accumulated depreciation and depletion, as well as shareholders&#146; equity
accounts) into U.S. dollars at historical exchange rates. The Company
translated monetary assets and liabilities denominated in Brazilian currency at
period-end exchange rates. The Company included the translation gain or loss
resulting from this restatement process in the applicable statements of
operations.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of January&nbsp;1, 1998, the Company concluded that the Brazilian economy
had ceased to be highly inflationary for purposes of SFAS 52 and changed its
functional currency from its reporting currency of U.S. dollars to the
Brazilian <I>reais</I>. Therefore, on January&nbsp;1, 1998, the Company translated the
U.S. dollar amounts of non-monetary assets and liabilities into <I>reais </I>at the
then-current exchange rate. These translated amounts became the new accounting
bases for such assets and liabilities. At each period ended after January&nbsp;1,
1998, the Company has translated all of its assets and liabilities into U.S.
dollars at the then-current applicable exchange rate and all accounts in the
statements of operations and cash flows at the average rates prevailing during
the applicable period. The Company has included the translation gain or loss
resulting from this translation process in the cumulative translation
adjustments component of shareholders&#146; equity.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;One significant effect of inflation and exchange rate variations on the
Company relates to its costs and operating expenses. A significant percentage
of the Company&#146;s costs and operating expenses are in <I>reais </I>and tend to increase
with Brazilian inflation because the Company&#146;s suppliers and service providers
generally increase prices to reflect Brazilian inflation. As expressed in U.S.
dollars, however, these increases have been typically offset at least in part
by the effect of the appreciation of the U.S. dollar against the <I>real</I>. If the
rate of Brazilian inflation increases more rapidly than the rate of
appreciation of the U.S. dollar against the <I>real</I>, then, as expressed in U.S.
dollars, the Company&#146;s costs and operating expenses may increase and assuming
constant U.S. dollar sales prices, the Company&#146;s profit margins may decrease.
If the rate of appreciation of the U.S. dollar exceeds the rate of Brazilian
inflation, then, as expressed in U.S. dollars, the Company&#146;s costs and
operating expenses may decrease and, assuming constant U.S. dollar and sales
prices, the Company&#146;s profit margins may increase.
</FONT>
<P align="left"><FONT size="2"><I>Effects of exchange rate variation</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since the Company adopted the <I>real </I>as its functional currency on January
1, 1998, the depreciation and appreciation of the <I>real </I>against the U.S. dollar
has impacted, and will continue to impact, the Company&#146;s results of operations
in several ways. The Company&#146;s reporting currency for all periods is the U.S.
dollar. The Company maintains its financial records in <I>reais</I>, and translates its statements of
operations into U.S. dollars at the average rate published by the Central Bank
of Brazil for the corresponding period. The amounts reported in the Company&#146;s
statements of operations in any given period are reduced or increased at the
same rate as the <I>real </I>has depreciated or appreciated in relation to the U.S.
dollar during that period.
</FONT>
<P align="center"><FONT size="2">72</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has significant amounts of U.S. dollar denominated
liabilities, as well as operating expenses denominated in or linked to U.S.
dollars. In addition, a substantial portion of the Company&#146;s revenues are
linked to U.S. dollars.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Virtually all of the Company&#146;s sales are of petrochemical products, which
generally trade freely in the international markets at prices expressed in U.S.
dollars. The Company generally attempts to set prices that take into account,
and vary to reflect changes in, the international market prices for its
petrochemical products and variations in the exchange rate. As a result,
although substantially all of the Company&#146;s revenues are in <I>reais</I>,
approximately 76% of the Company&#146;s sales in fiscal year 2002 were linked to
U.S. dollar-based international market prices. When the <I>real </I>depreciates
against the U.S. dollar, assuming international market prices remain constant
in U.S. dollars, the Company increases the prices for its products in <I>reais </I>(to
the extent possible in light of then-prevailing market conditions), and the
Company&#146;s net revenues in <I>reais </I>increase. Conversely, when the <I>real</I>
appreciates against the U.S. dollar, assuming international market prices
remain constant in U.S. dollars, the Company generally decreases the price of
its products in <I>reais, </I>and the Company&#146;s net revenues in <I>reais </I>tend to decrease
as well. In periods of high volatility in the U.S. dollar-<I>real </I>exchange rate,
there is usually a lag between the time that the U.S. dollar appreciates and
the time that the Company can effectively pass on such increased costs in <I>reais</I>
to its customers in Brazil. Such pricing mismatches decrease when fluctuations
in the U.S. dollar-<I>real </I>exchange rate are less volatile. These increases and
decreases in the Company&#146;s <I>reais </I>net revenue, however, are not reflected in the
Company&#146;s net revenue when reported in U.S. dollars.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During fiscal year 2002, approximately 66% of the Company&#146;s cost of sales
was represented, directly and indirectly, by the cost of naphtha, which is U.S.
dollar-denominated, and an additional 11% of the Company&#146;s cost of sales was
U.S. dollar-denominated or U.S. dollar-linked. The devaluation of the <I>real </I>has
an adverse effect on the cost of naphtha as well as other U.S. dollar-linked or
imported raw materials. As a result, when the <I>real </I>depreciates against the
U.S. dollar, assuming these costs remain constant in U.S. dollars, the cost for
the Company&#146;s products in <I>reais </I>increases and the Company&#146;s net operating
revenues in U.S. dollars decrease. Conversely, when the <I>real </I>appreciates
against the U.S. dollar, assuming these costs remain constant in U.S. dollars,
the cost for the Company&#146;s products in <I>reais </I>decreases and the Company&#146;s net
operating revenues in U.S. dollars increase. These decreases and increases in
the Company&#146;s <I>reais </I>net operating revenues, however, are not reflected in the
Company&#146;s net operating income when reported in U.S. dollars.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Another effect of devaluation is that the Company&#146;s operating costs and
expenses when expressed in U.S. dollars tend to decline. This happens
primarily because a portion of the Company&#146;s costs and a substantial portion of
the Company&#146;s operating expenses are denominated in <I>reais</I>. During the last
several years, the Company&#146;s <I>reais</I>-denominated costs and expenses have been
increasing at a rate slower than the devaluation of the <I>real</I>. Accordingly, the
effect has been to decrease costs of locally supplied products and services
when reported in U.S. dollars, and consequently to increase the Company&#146;s net
operating income when reported in U.S. dollars.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In recent periods, devaluation of the <I>real </I>has had the following effects,
among others, on the Company&#146;s balance sheet and results of operations:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The translation effects of the Company&#146;s non-<I>real-</I>denominated
assets and liabilities held in Brazil (<I>e.g.</I>, cash, cash equivalents and
short term investments and financial obligations) are recorded in the
Company&#146;s statements of operations, which are offset, in part, with
respect to monetary assets by monetary indexation of <I>real</I>-denominated
financial instruments. Primarily because of the Company&#146;s substantial
liabilities denominated in foreign currency, the Company recorded a
U.S.$596.0&nbsp;million net foreign exchange loss in its 2002 statement of
income, compared to a U.S.$136.1&nbsp;million net foreign exchange loss in
2001 and a U.S.$45.3&nbsp;million net foreign exchange loss in 2000. To the
extent these losses are not realized in a transaction (such as the repayment of the debt in the corresponding
period in which a devaluation occurs), the foreign exchange loss is added
back for purposes of determining the Company&#146;s cash flow.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">73</FONT>


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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The Company&#146;s <I>real</I>-denominated assets and liabilities in Brazil,
primarily accounts receivable, inventories and property, plant and
equipment, cash and cash equivalents and government securities, pension
plan liabilities, health care benefits and deferred income taxes, are
all translated into U.S. dollars at the official exchange rate
applicable at each balance sheet date as reported by the Central Bank.
Therefore, any depreciation of the <I>real </I>against the U.S. dollar has
been reflected as a reduction in the U.S. dollar value of those assets
and liabilities, charged directly to shareholders&#146; equity, included in
the cumulative translation adjustment account. These currency
translation effects are beyond the control of the Company&#146;s management.
Accordingly, the Company recorded a U.S.$326.1&nbsp;million credit
(resulting from an excess of liabilities over assets) directly to
shareholders&#146; equity in its statement of changes in shareholders&#146;
equity for 2002, without affecting its net income, to reflect the
nominal devaluation of the <I>real </I>against the U.S. dollar during 2002 of
approximately 34.3%. This compared to a charge of U.S.$28.1&nbsp;million
in 2001 to reflect the nominal devaluation of 15.7% during 2001 and a
charge of U.S.$112.9&nbsp;million in 2000 to reflect the nominal devaluation
of 8.5% during 2002.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign currency translation adjustments reflecting the devaluation of the
<I>real </I>may have a significant impact on the balance sheet of the Company because
its assets are primarily denominated in <I>reais</I>, but a material portion of its
liabilities are denominated in foreign currencies or linked to foreign
currencies. The reductions in the Company&#146;s asset values charged to
shareholders&#146; equity, however, do not necessarily adversely affect the
Company&#146;s cash flows, because the Company&#146;s revenues and cash earnings are
linked in large part to the U.S. dollar, and a portion of its operating
expenses are linked to the <I>real</I>.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The devaluation of the <I>real </I>also impacts the amount of retained earnings
available for distribution by the Company as dividends when measured in U.S.
dollars. Amounts reported as available for distribution in the Company&#146;s
statutory accounting records prepared under the Brazilian Corporate Law
decrease or increase, as the case may be, when measured in U.S. dollars as the
<I>real </I>depreciates or appreciates, respectively, against the U.S. dollar. In
addition, the devaluation of the <I>real </I>creates foreign exchange gains and losses
that are included in the results of operations determined under accounting
principles set forth under the Brazilian Corporate Law that indirectly affect
the amount of unappropriated earnings available for distribution.
</FONT>
<P align="left"><FONT size="2"><I>Risk management activities</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because the Company borrows in the international markets to support its
operations and investments, it is exposed to market risks from changes in
foreign exchange and interest rates. Export sales, which generate receivables
payable in U.S. dollars, do not cover all of the Company&#146;s U.S. dollar
liabilities.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Braskem developed a risk management policy as from December&nbsp;31, 2001 with
the following objectives: maintain coverage of principal and interest
settlements (consolidated)&nbsp;maturing within 12&nbsp;months for, at least (i)&nbsp;60% of
Braskem&#146;s total U.S.-dollar indebtedness that is related to exports (trade
finance), excluding Advances on Currency Contracts (ACCs) with a remaining
maturity of up to 6&nbsp;months and Advances on Export Contracts (ACEs) and (ii)&nbsp;75%
of the total debt in U.S. dollars unrelated to exports (non-trade finance).
Compliance with this policy varies based upon applicable market conditions,
credit availability and cash balances.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To further mitigate its exposure to exchange rate risk, the Company tries,
when possible, to borrow for its working capital needs using trade finance
loans, which funding is generally available at a lower cost because it is
linked to the Company&#146;s U.S. dollar exports. The Company cannot assure,
however, that, in the future, U.S. dollar revenues that it generates from
exports will be in an amount sufficient to cover its U.S. dollar trade finance
liabilities.
</FONT>

<P align="center"><FONT size="2">74</FONT>

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<P align="left"><FONT size="2"><B>Effect of Taxes on the Company&#146;s Income</B>
</FONT>

<P align="left"><FONT size="2"><B><I>Income Tax and Social Contribution Tax</I></B></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income taxes in Brazil generally include federal income tax and social
contribution. The composite tax rate is 34%, comprised of income tax (15%,
plus a surtax of 10% on taxable income exceeding R$240,000 per year) and social
contribution tax (9%). The rate of federal social and contribution tax has
fluctuated between 9% and 12% in 2000, and has been 9% since 2001. This tax is
not deductible for federal income tax purposes. The Company is contesting the
constitutionality of this tax. See Note 11(e) to the Consolidated Financial
Statements.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has available certain federal tax exemptions based upon
federal legislation that offers fiscal incentives to companies that locate
their manufacturing operations in the northeastern region of Brazil. These
exemptions entitle the Company to pay only 25% of the statutory income tax rate
on the profit arising from the sale of basic petrochemical products and
utilities until 2011. Trikem is exempt from corporate income tax until 2001 on
the results of its industrial operations at its PVC plant in Bahia. Trikem is
entitled to pay only 25% of the statutory income tax rate until 2008 on the
results of its industrial operations at its PVC plant in Alagoas. See Note
11(d) to the Consolidated Financial Statements.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trikem&#146;s production of caustic soda and EDC in the States of Bahia and
Alagoas, and the Company&#146;s production of DMT are not covered by these
exemptions, but in accordance with Law No.&nbsp;9,532/97, the Company is entitled to
pay with respect to the profits arising from sales by these plants:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">62.5% of the statutory income tax rate from January&nbsp;1, 1998 to December&nbsp;31, 2003;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">75% of the statutory income tax rate from January&nbsp;1, 2004 to December&nbsp;31, 2008; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">87.5% of the statutory income tax rate from January&nbsp;1, 2009 to December&nbsp;31, 2013.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At the end of each year, if the Company or any of its affected
subsidiaries has taxable profit resulting from the operations described above,
the amount of the income tax exemption or reduction is credited to a capital
reserve, which can only be used to increase capital or absorb losses.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due to operating losses sustained by the Company in the past, the Company
and its subsidiaries had U.S.$535.0&nbsp;million in tax loss carryforwards available
at December&nbsp;31, 2002, of which U.S.$3.1&nbsp;million have been used as the basis for
recognizing net deferred tax assets and the remainder of which have a full
valuation allowance. Tax loss carryforwards available for offset in Brazil do
not expire. However, the annual offset is limited to 30% of the adjusted net
profit of the Company. This limit also affects the social contribution on net
profits.
</FONT>
<P align="left"><FONT size="2"><B><I>Other Taxes</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is subject to a number of Brazilian taxes in addition to the
corporate income tax and the social contribution tax. Changes in Brazilian tax
legislation can adversely impact the Company&#146;s results of operations. Some of
the other Brazilian taxes applicable to the Company are described below.
</FONT>
<P align="left"><FONT size="2"><I>Federal excise tax (IPI)</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The <I>Imposto sobre Produtos Industrializados </I>(the Federal Excise Tax or
&#147;IPI&#148;), is a federal excise tax, assessed at the time of sale of manufactured
products either to another manufacturer or to the retailer of the ultimate
customer. Importers also pay this tax at the time the products are imported.
The IPI is charged on a non-cumulative basis, so that the tax assessed in
previous transactions may be credited against the amounts due in subsequent
transactions. Export sales are currently exempt from IPI. The Company&#146;s
Polyolefins products are taxed at the rate of 5%.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company recorded revenues of U.S.$284.5&nbsp;million in 2002 relating to a
credit for IPI in respect of purchases of raw materials that are in a zero
percent tax bracket, which amount includes approximately U.S.$75.0&nbsp;million that
had already been offset against taxes payable in prior years. The Company
recognized a portion of these revenues in taxes recoverable, including U.S.$67.5 as current
assets and U.S.$148.8 as non-current assets. This tax credit was granted based
on a decision of the Brazilian Federal Supreme Court on December&nbsp;19, 2002.
Although the Federal government has filed an appeal of certain aspects of this
decision, such appeal will not affect the validity of this tax credit, and for this reason, the Company decided to recognize this tax credit
in its Consolidated Financial Statements for the year ended
December&nbsp;31, 2002. As the tax
credit only applies to the Company&#146;s operations in the State of Rio Grande do
Sul, the Company has also brought litigation against the federal government in
respect of its purchases of raw materials in the States of S&#227;o Paulo, Bahia and
Alagoas, seeking to obtain a similar tax credit.
</FONT>

<P align="center"><FONT size="2">75</FONT>




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<P align="left"><FONT size="2"><I>State value added taxes (ICMS)</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Imposto sobre Opera&#231;&#245;es Relativas &#224; Circula&#231;&#227;o de Mercadorias e sobre
Presta&#231;&#245;es de Servi&#231;os de Transporte Interestadual e Intermunicipal e de
Comunica&#231;&#227;o </I>(the State Value Added Tax or<I>&#147;ICMS&#148;</I>) is a state value-added tax
imposed on sales of goods and the rendering of telecommunication and
transportation services at rates that may vary from 7% to 30%, depending on the
product sold and the specific regulations of each state. The calculation basis
of the tax is the price of the transaction, net of invoiced discounts and
returns (in the case of sale of goods). ICMS is also charged on a
non-cumulative basis, so that the tax assessed in previous transactions may be
used as a credit to be offset against the amounts due in subsequent
transactions. States impose specific rules on interstate transactions
involving oil, natural gas and their byproducts, the revenues from which are
taxable. Export sales are currently exempt from ICMS.
</FONT>
<P align="left"><FONT size="2"><I>Other taxes on revenues (PIS and COFINS)</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other taxes on revenues include two federal contribution taxes, the
<I>Programa de Integra&#231;&#227;o Social </I>(the Social Integration Program or &#147;PIS&#148;), and
the <I>Contribui&#231;&#227;o para Financiamento da Seguridade Social </I>(the Contribution for
Social Security Financing or &#147;COFINS&#148;). The rate for COFINS is currently 3%
and for PIS is currently 1.65%.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PIS finances special social programs through the collection of a federal
tax on gross revenues. PIS may be charged on a cumulative or non-cumulative
basis, depending on the type of activities performed by the Company. A company
may be subject to both taxation regimes, in case it develops different kinds of
activities. Cumulative PIS is charged at a rate of 0.65%, and non-cumulative
PIS is charged at a rate of 1.65%. The Company pays PIS on its gross revenues
(except in respect of automotive gasoline sales) on a non-cumulative basis at a
rate of 1.65%. The Company pays PIS on its gross revenues in respect of
automotive gasoline sales on a cumulative basis at a rate of 2.7%. COFINS
finances special social programs through the collection of a federal tax on
gross revenues of 3%. This tax is charged on a cumulative basis on each
transaction in the supply chain. Export sales are currently exempt from both
of these taxes as long as the proceeds of such sales are remitted back to
Brazil.
</FONT>
<P align="left"><FONT size="2"><I>Tax on bank account transactions (CPMF)</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The <I>Contribui&#231;&#227;o Provis&#243;ria sobre Movimenta&#231;&#227;o Financeira </I>(the Provisional
Contribution on Financial Movements or &#147;CPMF&#148;) is a provisional tax imposed on
all transactions involving the debit or withdrawal of money from a bank account
in Brazil. The CPMF rate has fluctuated between 0.20% to 0.38% since its
adoption in 1997. Since March&nbsp;18, 2001, the rate has been 0.38%, which will
remain in effect through December 2003. From January through December 2004,
the applicable rate will decrease to 0.08%, after which the tax is scheduled to
expire.
</FONT>
<P align="left"><FONT size="2"><B><I>Tax Disputes</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is currently involved in several tax proceedings as discussed
in Note 13 to the Company&#146;s Consolidated Financial Statements. The
Company has established reserves based on its estimated costs of resolving
those claims in which the Company believes it has a probable loss. The tax
contingencies relate primarily to the PIS and COFINS taxes, the IPI tax, the
corporate income tax and social security contributions. The Company does not
believe these tax proceedings will have a material adverse effect on its
financial position. It is possible, however, that future results of operations
could be materially affected by changes in the Company&#146;s assumptions and the
effectiveness of the Company&#146;s strategies with respect to these tax
proceedings. For more information on the Company&#146;s tax proceedings, see &#147;Item&nbsp;8. Financial
Information&#151;Consolidated Financial Statements and Other Financial
Information&#151;Legal Proceedings.&#148;
</FONT>
<P align="center"><FONT size="2">76</FONT>

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<P align="left"><FONT size="2"><B>Results of Operations</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The discussion of results of operations, comparing 2002 to 2001 and 2001
to 2000, is provided on a historical basis and is followed by a supplemental
discussion on an unaudited pro forma basis, which gives effect to the Nova
Cama&#231;ari Acquisition and the Related Party Mergers as if they had occurred on
January&nbsp;1, 2001. The 52114 Merger was structured as a stock-for-stock exchange
and was accounted for by Braskem as an acquisition of 52114 Participa&#231;&#245;es using
the purchase method of accounting. As a result of the Nova Cama&#231;ari
Acquisition, OPP Produtos and Copene were under the common control of the
Odebrecht Group after July&nbsp;25, 2001. As a result of the merger of OPP Produtos
with Copene to form Braskem, Braskem was required to represent its financial
results as if the OPP Produtos Merger had occurred on July&nbsp;25, 2001, the date
on which OPP Produtos and Copene came under the common control of the Odebrecht
Group.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The acquisitions of Nova Cama&#231;ari, OPP Produtos and 52114 Participa&#231;&#245;es
significantly affected the results of Braskem due to the significant size of
their operations in relation to the operations of Copene, Braskem&#146;s
predecessor. Therefore, the financial results of Braskem for periods
subsequent to July&nbsp;25, 2001, the date of the Nova Cama&#231;ari Acquisition, are not
comparable to periods prior to the Nova Cama&#231;ari Acquisition. In order to
enhance comparability and make an analysis of the results of 2002 and 2001 more
meaningful, after the following discussion on a historical basis, the Company&#146;s
management has provided a supplemental discussion based upon unaudited proforma
financial information for 2002 and 2001 as if the Nova Cama&#231;ari Acquisition and
the Related Party Mergers had occurred on January&nbsp;1, 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although the Consolidated Financial Statements have been prepared in
accordance with U.S. GAAP, pursuant to SFAS 131, the segment information
presented in this section has been prepared in accordance with accounting
principles determined by the Brazilian Corporate Law, which differ in certain
significant respects from U.S. GAAP, and translated into U.S. dollars using the
average rate prevailing in the month of the charge or credit to income. The
Company&#146;s discussion and analysis of the results of operations of its business
segments is based upon such segment financial information. As a result, the
financial information presented in this section with respect to the Company&#146;s
business segments are not directly comparable to the consolidated results of
the Company presented in this section.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because the results of operations of Company&#146;s business segments, other
than the Basic Petrochemical segment, are not comparable in any of the periods
presented due to the effects of the Nova Cama&#231;ari Acquisition and the Related
Party Mergers, the Company has also presented an analysis of the historical
results of operations or the historical combined results of the principal
business unit that comprise each of its business segments, other than the Basic
Petrochemical segment.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The financial information of the Basic Petrochemicals segment is derived
from the financial statements of the Company for the years ended December&nbsp;31,
2002, 2001 and 2000 prepared in accordance with accounting principles
determined by the Brazilian Corporate Law. Because the results of operations
of the Basic Petrochemcals segment are included in the Company&#146;s results of
operation for the years ended December&nbsp;31, 2002, 2001 and 2000, no separate
analysis of the combined results of operations is presented comparing fiscal
years 2002 and 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The financial information for OPP Qu&#237;mica and Polialden, the subsidiaries
that comprise the Polyolefins segment, is derived from the financial statements
of OPP Qu&#237;mica and Polialden for the years ended December&nbsp;31, 2002 and 2001
prepared in accordance with accounting principles determined by the Brazilian
Corporate Law.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The financial information for Trikem, the subsidiary that comprises the
Company&#146;s Vinyls segment, is derived from the financial statements of Trikem
for the years ended December&nbsp;31, 2002 and 2001 prepared in accordance with
accounting principles determined by the Brazilian Corporate Law.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The financial information for Nitrocarbono and Proppet, the subsidiaries
that comprise the Business Development segment, is derived from the financial
records of Nitrocarbono for September to December 2002 and financial records of
the Company with respect to its PET business. The Business Development Unit of
the Company is responsible for managing certain of the Company&#146;s investments,
principally its investments in Petroflex and Cetrel. However, as the results
of the Company&#146;s investments managed by the Business Development Unit are
reported as equity in earnings (losses)&nbsp;of affiliates, the results of these
companies are not included in the segment discussions included below.
</FONT>
<P align="center"><FONT size="2">77</FONT>

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<P align="left"><FONT size="2"><B>Historical Discussion</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the certain historical consolidated
financial information of the Company for the years ended December&nbsp;31, 2002,
2001 and 2000.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="95%">
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="11"><FONT size="1"><B>(in thousands of U.S. dollars, except percentages)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" nowrap><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">2,391,116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" nowrap><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">1,771,891</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" nowrap><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">1,555,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cost of sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,900,987</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,447,207</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,252,357</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gross profit</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">490,129</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">324,684</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">302,743</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Selling, general and administrative expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(252,475</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(80,632</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(77,035</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Credit from Federal Excise Tax (IPI)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">284,509</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">522,163</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">244,052</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">225,708</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Financial income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">167,854</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">80,448</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">94,869</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Financial expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,159,842</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(294,593</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(134,000</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other non-operating expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(57,281</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(26,312</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,494</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income tax (expense)&nbsp;benefit</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(20,422</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14,332</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,937</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Equity in earnings of affiliates, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22,467</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6,090</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,889</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Minority interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">65,024</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(63,848</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cumulative effect of a change in accounting
principle, net of income tax effect</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,767</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net income (loss)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">(460,037</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">(50,244</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" nowrap><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">188,050</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gross Margin (%)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating Margin (%)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">21.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth certain historical financial information
with respect to the Company&#146;s business segments for the years ended December
31, 2002, 2001 and 2000.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="11"><FONT size="1"><B>(in thousands of U.S. dollars, except percentages)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Basic Petrochemicals</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" nowrap><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">1,127,142</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" nowrap><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">1,330,987</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" nowrap><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">1,568,713</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cost of sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(972,506</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,129,833</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,252,357</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gross profit</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">154,636</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">201,153</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">316,356</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">84,348</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">132,255</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">218,335</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gross Margin (%)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.7</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15.1</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20.2</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating Margin (%)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.5</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.9</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.9</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Polyolefins</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" nowrap><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">873,748</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" nowrap><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">341,364</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cost of sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(729,351</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(245,246</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gross profit</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">144,398</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">96,118</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">312,667</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">52,570</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">78</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="11"><FONT size="1"><B>(in thousands of U.S. dollars, except percentages)</B></FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gross Margin (%)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.5</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">28.2</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating Margin (%)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35.8</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15.4</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Vinyls</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">403,930</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">153,864</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cost of sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(289,500</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(106,602</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gross profit</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">114,430</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">47,262</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18,739</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">23,574</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gross Margin (%)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">28.3</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">30.7</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating Margin (%)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.6</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15.3</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Business Development</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">92,506</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right"><FONT size="2">28,368</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cost of sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(77,869</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(23,952</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gross profit</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14,637</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,417</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,721</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,208</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gross Margin (%)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15.8</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15.6</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating Margin (%)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.2</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.3</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2"><B><I>Year Ended December&nbsp;31, 2002 Compared with Year Ended December&nbsp;31, 2001</I></B>
</FONT>

<P align="left"><FONT size="2"><I>Consolidated Results</I></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Net
Sales.</u> Net sales of the Company increased by 34.9% during fiscal year
2002 to U.S.$2,391.1&nbsp;million as compared to U.S.$1,771.9&nbsp;million in fiscal year
2001, primarily as a result of the inclusion of the net sales of the
Polyolefins, Vinyls and Business Development Units following the date of the
Nova Cama&#231;ari Acquisition. See &#147; &#151;Results of Operation.&#148; In addition, net
sales for the Basic Petrochemicals segment, which represents the only business
segment included in the historical financial results for the full years of 2002
and 2001, decreased by 15.3% to U.S.$1,127.1&nbsp;million in 2002 from U.S.$1,331.0
million in 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Cost of Sales and Gross Profit.</u> Cost of sales increased by 31.4% during
fiscal year 2002 to U.S.$1,901.0&nbsp;million as compared to U.S.$1,447.2&nbsp;million
during fiscal year 2001, primarily as a result of the inclusion of the cost of
sales of the Polyolefins, Vinyls and Business Development Units following the
date of the Nova Cama&#231;ari Acquisition. See &#147; &#151;Results of Operation.&#148; In
addition, cost of sales for the Basic Petrochemicals segment, which represents
the only business segment included in the historical financial results for the
full years of 2002 and 2001, decreased by 13.9% to U.S.$972.5&nbsp;million in 2002
from U.S.$1,129.8&nbsp;million in 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result, gross profit increased by 51% in fiscal year 2002 to
U.S.$490.1&nbsp;million from U.S.$324.7&nbsp;million in fiscal year 2001. Gross margin
for 2002 was 20.5% as compared to 18.3% in 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Selling, General and Administrative Expenses.</u> Selling, general and
administrative expenses increased by 213.3% during fiscal year 2002 to
U.S.$252.5&nbsp;million as compared to U.S.$80.6&nbsp;million during fiscal year 2001,
primarily as a result of the inclusion of the selling, general and
administrative expenses of the Polyolefins, Vinyls and Business Development
Units following the date of the Nova Cama&#231;ari Acquisition. See &#147; &#151;Results of
Operation.&#148; Selling, general and administrative expenses represented 10.6%
of net sales during 2002 and 4.6% of net sales during 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Credit from Federal Excise Tax (IPI).</u> Credit from Federal Excise Tax
(IPI)&nbsp;was U.S.$284.5&nbsp;million in 2002, the year in which this credit was
recognized. See &#147; &#151;Effect of Taxes on the Company&#146;s Income &#151;Other Taxes
&#151;Federal excise tax (IPI)&#148; and Note 5 to the Consolidated Financial
Statements.
</FONT>
<P align="center"><FONT size="2">79</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Operating Income.</u> Operating income increased by 114% during fiscal year
2002 to U.S.$522.2&nbsp;million as compared to U.S.$244.1&nbsp;million during fiscal year
2001, primarily as a result of the Credit from Federal Excise Tax (IPI)
recognized in 2002 in the aggregate amount of U.S.$284.5&nbsp;million and the
inclusion of the gross profit of the Polyolefins, Vinyls and Business
Development Units following the date of the Nova Cama&#231;ari Acquisition<I>. </I>In
addition, operating income for the Basic Petrochemicals segment decreased by
36.3% to U.S.$84.3&nbsp;million during 2002 as compared with U.S.$132.3&nbsp;million in
2001. Operating income represented 21.8% of net sales during 2002 and 13.8% of
net sales during 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Financial Income.</u> Financial income increased by 108.8% during fiscal year
2002 to U.S.$167.9&nbsp;million as compared to U.S.$80.4&nbsp;million during fiscal year
2001, primarily as a result of the inclusion of the financial income of the
Polyolefins, Vinyls and Business Development Units following the date of the
Nova Cama&#231;ari Acquisition.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Financial
Expenses.</u> Financial expenses increased by 293.7% during fiscal
year 2002 to U.S.$1,159.8&nbsp;million as compared to U.S.$294.6&nbsp;million during
fiscal year 2001, primarily as a result of the inclusion of the financial
expenses of the Polyolefins, Vinyls and Business Development Units following the
date of the Nova Cama&#231;ari Acquisition.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Other Non-operating Expenses.</u> Other operating expenses increased by
117.9% during fiscal year 2002 to U.S.$57.3&nbsp;million as compared to U.S.$26.3
million during fiscal year 2001. This increase was primarily as a result of
the write-off by the Company of certain obsolete assets in 2002.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Income Tax (Expense) Benefit.</u> Income tax (expense)&nbsp;benefit was an expense
of U.S.$20.4&nbsp;million during fiscal year 2002 as compared to a benefit of
U.S.$14.3&nbsp;million during fiscal year 2001. This change was primarily as a
result of the inclusion of the financial income of the Polyolefins, Vinyls and
Business Development Units following the date of the Nova Cama&#231;ari Acquisition.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Equity in Earnings (Losses) of Affiliates, net.</u> Equity in earnings
(losses)&nbsp;of affiliates, net was a gain of U.S.$22.5&nbsp;million during fiscal year
2002 as compared to a loss of U.S.$6.1&nbsp;million during fiscal year 2001. This
change was primarily as a result of caused by (1)&nbsp;an increase of approximately
U.S.$6.4&nbsp;million in the equity in earnings of Copesul in 2002 as compared to
2001 and (2)&nbsp;equity in earnings of Politeno in an amount of U.S.$13.0&nbsp;million
in 2002 as compared to equity in losses of Politeno in an amount of U.S.$8.2
million in 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Minority Interest.</u> Minority interest was a gain of U.S.$65.0&nbsp;million
during fiscal year 2002 as compared to a loss of U.S.$63.8&nbsp;million during
fiscal year 2001. The gain recorded in 2002 offset the proportion of the
losses sustained by Trikem during that year (approximately U.S.$130.0&nbsp;million)
that are attributable to the interests in Trikem held by Trikem&#146;s minority
shareholders. In addition, the gain in 2002 was partially offset by a loss in
minority interest corresponding to the proportion of income earned by Polialden
during 2002 that is attributable to the interests in Polialden held by its
minority shareholders. In 2001, both Trikem and Polialden recorded net income,
a proportion of which was offset by the Company to reflect the proportional
interests of the minority shareholders in these companies.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Net Loss.</u> Net loss increased by 816.3% during fiscal year 2002 to
U.S.$460.0&nbsp;million, or 19.2% of net sales, as compared to U.S.$50.2&nbsp;million, or
2.8% of net sales, during fiscal year 2001.
</FONT>
<P align="center"><FONT size="2">80</FONT>

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<P align="left"><FONT size="2"><I>Business Segment Results</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Basic Petrochemicals</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>The financial information with respect to the Basic Petrochemicals segment
is derived from the financial statements of the Company for the years ended
December&nbsp;31, 2002 and 2001. In accordance with SFAS 131, the segment data
included in the Company&#146;s financial statements is presented under the Brazilian
Corporate Law accounting principles.</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Net Sales.</u> Net sales of the Basic Petrochemicals segment decreased by
15.3% during 2002 to U.S.$1,127.1&nbsp;million from U.S.$1,331.0&nbsp;million during
2001. This decrease is primarily attributable to a decrease of 6.6% in
ethylene sales volume resulting from the stoppage of the pyrolysis plant that
is part of Olefins Unit 1 for 92&nbsp;days during 2002 and the 14.1% decrease in
average ethylene prices, to U.S.$414.80 per ton in 2002 from U.S.$483.10 per
ton in 2001. Sales of Utilities accounted for 9.5% of net revenue of the Basic
Petrochemicals Unit in 2002, totaling U.S.$106.8&nbsp;million, of which U.S.$59.7
million was attributable to sales of steam, U.S.$38.1&nbsp;million was attributable
to sales of electricity and U.S.$8.9&nbsp;million was attributable to sales of water
and compressed air, a 10.3% decrease as compared to 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net revenues of the Basic Petrochemicals segment from export sales
increased by 5.4% during 2002 to U.S.$127.0&nbsp;million from
U.S.$121.0&nbsp;million in
2001. Exports of gasoline, initiated by the Basic Petrochemicals segment in
2002, amounted to U.S.$27.7&nbsp;million and contributed strongly to this improved
export performance.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales volume of ethylene decreased by 6.6% to 994.8 thousand tons in 2002
as compared to 1,064.8 thousand tons in 2001, principally due to a scheduled
stoppage of the Pyrolysis I Plant. Average prices for ethylene decreased by
14.1% to U.S.$414.8 per ton in 2002 from U.S.$483.1 per ton in 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Annual sales volume of propylene decreased by 5.7% in 2002, to 463.5
thousand tons from 491.7 thousand tons in 2001. Average domestic prices for
propylene remained relatively stable in 2002, including a modest increase of
0.6% to U.S.$354.5 per ton in 2002 as compared with U.S.$352.5 per ton in 2001,
principally due to higher demand for this product during 2002.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Cost of Sales and Gross Profit.</u> In 2002, total cost of sales of the
Basic Petrochemicals segment decreased by 13.9% to U.S.$972.5&nbsp;million from
U.S.$1,129.8&nbsp;million in 2001. This decrease is primarily attributable to the
lower sales volume registered in 2002, as well as to the decrease of 4.3% in
the average annual price of naphtha purchased by the Company during 2002, as
compared with 2001. Naphtha accounted for approximately 83% and 75% of the
Basic Petrochemicals segment&#146;s cost of sales in 2002 and 2001, respectively.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross
profit of the Basic Petrochemicals segment decreased by 23.2% to
U.S.$154.6&nbsp;million in 2002 from U.S.$201.2&nbsp;million in 2001, thus resulting in a
reduced gross margin for 2002 of 13.7%, when compared with a gross margin of
15.1% for 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Operating Income.</u> The operating income of the Basic Petrochemicals
segment decreased by 36.1% to U.S.$84.3&nbsp;million during 2002 as compared with
U.S.$132.3&nbsp;million in 2001. The Basic Petrochemical&#146;s operating margin for
2002 was 7.5%, as compared with 9.9% in 2001, principally as a result of the
decline in gross margins referred to above, coupled with the increase of 1.6%
in general and administrative expenses due to certain non-recurring expenses
incurred in 2002 and associated with the integration and restructuring process
that resulted in the formation of the Company. See &#147;Item&nbsp;4. Information on the
Company&#151;History and Development of the Company.&#148;
</FONT>
<P align="center"><FONT size="2">81</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Polyolefins</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>The financial information with respect to the Polyolefins segment is
derived from the financial statements of the Company for the years ended
December&nbsp;31, 2002 and 2001. As a result of the common control exercised by the
Odebrecht Group over the Company and OPP Qu&#237;mica prior to the OPP Produtos
Merger, in accordance with U.S. GAAP, the Company accounted for the acquisition
of OPP Produtos, including its subsidiary OPP Qu&#237;mica, in a manner similar to a
pooling-of-interests as if this acquisition had occurred on July&nbsp;25, 2001, the
date of the Nova Cama&#231;ari Acquisition and the date on which such common control
had commenced. In accordance with SFAS 131, the segment data included in the
Company&#146;s financial statements is presented under the Brazilian Corporate Law
accounting principles. The financial information with respect to OPP Qu&#237;mica
and Polialden are based on financial statements of OPP Qu&#237;mica and Polialden
for the years ended December&nbsp;31, 2002 and 2001 prepared in accordance with
accounting principles determined by the Brazilian Corporate Law.</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Net
Sales.</u> Net sales of the Polyolefins segment increased by 155.9% during
2002 to U.S.$873.7&nbsp;million from U.S.$341.4&nbsp;million during 2001. This increase
was primarily attributable to the effects of the OPP Produtos Merger, which
resulted in an increase of 155.4% in the sales volume of polyethylene and an
increase of 159.5% in the sales volume of polypropylene during 2002, when
compared with 2001. In addition, the aforementioned sales volume increases
more than offset the decreases of 9% and 3% in the average prices of
polyethylene and polypropylene, respectively, during 2002, when compared with
2001. Net export sales of the Polyolefins segment increased by 242.0% during
2002 to U.S.$260.7&nbsp;million from U.S.$76.2&nbsp;million during 2001. This increase
is primarily attributable to the effects of the OPP Produtos Merger, which
resulted in an increase of 151.2% in the export volumes of polyethylene and
polypropylene.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net revenues of OPP Qu&#237;mica and Polialden, the companies that comprise
Braskem&#146;s Polyolefins segment, on a combined basis increased by 3.1% during 2002
to U.S.$873.7&nbsp;million from U.S.$847.3&nbsp;million during 2001. This increase was
primarily attributable to the increase of 54.4% in combined gross export sales
of the Polyolefins Unit, of OPP Qu&#237;mica and Polialden, to U.S.$260.7&nbsp;million in
2002 from U.S.$168.8&nbsp;million during 2001. This increase is primarily
attributable to a 51% increase in LLDPE export sales volumes &#151; from 43.4
thousand tons in 2001 to 65.6 thousand tons in 2002 &#150; as well as to higher
export sales of UTEC in 2002, which amounted to U.S.$16.7&nbsp;million in comparison
to U.S.$6.3&nbsp;million in 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales volume of polyethylene by OPP Qu&#237;mica and Polialden on a combined
basis increased by 5% to 660.0 thousand tons in 2002 as compared to 628.5
thousand tons in 2001, principally due to a 24.1% increase in export volumes in
2002 as compared with 2001 (to 168.3 thousand tons in 2002 from 135.8 thousand
tons in 2001). This performance reflected a combination of factors,
including
securitization commitments and an improvement in international market demand
for this product. Average domestic prices for polyethylene decreased by 15.2%
to U.S.$704.3 per ton in 2002 as compared to U.S.$830.9 per ton in 2001,
following the trend in international market prices for polyethylene in 2002.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales volume of polypropylene by OPP Qu&#237;mica and Polialden on a combined
basis increased by 9% to 411.4 thousand tons in 2002 as compared to 376.8
thousand tons in 2001, reflecting improved demand for thermoplastic
resins in
2002. Average domestic prices for polypropylene decreased by 14.2% to
U.S.$675.0 per ton in 2002 as compared to U.S.$787.0 per ton in 2001, following
the trend in international market prices for polypropylene in 2002.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Cost
of Sales and Gross Profit.</u> Cost of sales of the Polyolefins segment
increased by 197.4% during 2002 to U.S.$729.4&nbsp;million from U.S.$245.2&nbsp;million
during 2001. This increase was primarily attributable to the effects of the
OPP Produtos Merger. Purchases by the Polyolefins segment of raw materials from
the Basic Petrochemicals segment increased by 135.8% in 2002 to U.S.$156.5
million from U.S.$66.4&nbsp;million in 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross
profit of the Polyolefins segment increased by 50.3% to U.S.$144.4
million in 2002 from U.S.$96.1&nbsp;million in 2001, mainly due to the effects of
the OPP Produtos Merger. Gross margin for the Polyolefins segment was 16.5% in
2002 and 28.2% in 2001, due mainly to the aforementioned decrease in the
average domestic prices of polyethylene and polypropylene in 2002 compared to
2001.
</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of sales of OPP Qu&#237;mica and Polialden on a combined basis increased
by 9.2% during 2002 to U.S.$729.4&nbsp;million from U.S.$668.2&nbsp;million during 2001.
This increase was primarily attributable to an increase of 6.4% in sales volume
of both polyethylene and polypropylene in 2002 in comparison with 2001, as well
as from increases in plant insurance expenses incurred in 2002. Purchases of
raw materials from the Company by OPP Qu&#237;mica and Polialden decreased by 2% in
2002 to U.S.$155.3&nbsp;million from U.S.$158.4&nbsp;million in 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross profit of OPP Qu&#237;mica and Polialden on a combined basis decreased by
19.4% to U.S.$144.4&nbsp;million in 2002 from U.S.$179.1 million in 2001, thus
resulting in a gross margin for 2002 of 16.5% and 21.1% in 2001, and reflecting
the aforementioned impacts on the cost of sales.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
operating income of the Polyolefins segment increased by 494.5% to
U.S.$312.7&nbsp;million during 2002 as compared to U.S.$52.6&nbsp;million in 2001, due
mainly to the effects of the OPP Produtos Merger and the recognition in 2002 by
OPP of the U.S.$284.5&nbsp;million IPI tax credit (see &#147; &#151;Effect of Taxes on the
Company&#146;s Income&#151;Other Taxes&#151;<I>Federal excise tax (IPI)</I>&#148; and Note 5
to the Consolidated Financial Statements). The operating margin for the
segment in 2002 was 35.8% as compared to 15.4% in 2001, due mainly to the
aforementioned IPI tax credit booked in 2002.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The operating income of OPP Qu&#237;mica and Polialden on a combined basis
increased by 302.3% to U.S.$312.7&nbsp;million during 2002 as compared with
U.S.$77.7&nbsp;million in 2001. Operating margin for 2002 was 35.8% as compared
with 9.1% in 2001, principally due to the following:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the positive impact as a result of the recognition in 2002 by OPP
of the U.S.$284.5&nbsp;million IPI tax credit (see &#147; &#151;Effect of Taxes on
the Company&#146;s Income&#151;Other Taxes&#151;<I>Federal excise tax (IPI)</I>&#148;
and Note 5 to the Consolidated Financial Statements); and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the negative impact of a U.S.$19.4&nbsp;million increase (or 74%) in
amortization expenses, from U.S.$26.2&nbsp;million in 2001 to U.S.$45.6
million in 2002, due mainly to the full amortization of the deferred
exchange rate variance of 2001, which amounted to U.S.$34.9&nbsp;million in
2002 in comparison to U.S.$13.9&nbsp;million in 2001. The original
deferral of the exchange rate variance in 2001 had been recorded only
in the Brazilian Corporate Law financial statements and not in the
U.S. GAAP financial statements.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Vinyls</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>The financial information with respect to the Vinyls segment is derived
from the financial statements of the Company for the years ended December&nbsp;31,
2002 and 2001. As a result of the common control exercised by the Odebrecht
Group over the Company and Trikem prior to the OPP Produtos Merger, in
accordance with U.S. GAAP, the Company accounted for the acquisition of OPP
Produtos, including its subsidiary Trikem, in a manner similar to a
pooling-of-interests as if this acquisition had occurred on July&nbsp;25, 2001, the
date of the Nova Cama&#231;ari Acquisition and the date on which such common control
had commenced. In accordance with SFAS 131, the segment data included in the
Company&#146;s financial statements is presented under the Brazilian Corporate Law
accounting principles. The financial information with respect to Trikem is
based on financial statements of Trikem for the years ended December&nbsp;31, 2002
and 2001 prepared in accordance with accounting principles determined by the
Brazilian Corporate Law.</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Net Sales.</u> Net sales of the Vinyls segment increased by 162.4% during
2002 to U.S.$403.9&nbsp;million from U.S.$153.9&nbsp;million during 2001. This increase
was primarily attributable to the effects of the OPP Produtos Merger, which
resulted in significant increases in the Vinyls&#146; segment&#146;s main products, PVC
(171.3%) and caustic soda (153.2%). In addition, these sales volume increases
more than offset the decrease of 39% in average caustic soda prices during
2002. Net revenues of the Vinyls segment from export sales increased by 297.9%
during 2002 to U.S.$59.5&nbsp;million from U.S.$14.2&nbsp;million during 2001. This
increase is primarily attributable to the effects of the OPP Produtos Merger,
which resulted in significant increases in volumes of exports by the Vinyls&#146;
segment&#146;s main products, EDC (504.7%) and PVC (124.7%).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net sales of Trikem, the Company&#146;s subsidiary that comprises the Vinyls
segment, decreased by 5.8% during 2002 to U.S.$403.9&nbsp;million from U.S.$428.6
million during 2001. This reduction was primarily attributable to the decrease
during 2002, when compared with 2001, of 5.4% in average domestic prices for
PVC and 48.3% in average domestic prices for caustic soda. Gross export sales
of Trikem, net of discounts, returns and allowances, increased by 44.1% during
2002 to U.S.$59.5&nbsp;million from U.S.$41.3&nbsp;million during 2001. This improved
performance was primarily attributable to an increase of export sales of EDC,
in an aggregate amount of U.S.$20.5&nbsp;million in 2002, an increase of 173.3%
compared to 2001. This increase also reflected the increase in 2002, when
compared to 2001, of 135.6% in average EDC prices.
</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trikem&#146;s total sales volume of PVC increased by 8.8% to 379.3 thousand
tons in 2002 compared to 348.6 thousand tons in 2001, principally due to a 7.5%
increase in domestic sales volumes, which reflected improving domestic demand
for PVC in 2002. Average domestic prices for PVC decreased by 5.4% to
U.S.$677.8 per ton in 2002 as compared to U.S.$716.5 per ton in 2001, following
the trend in international market prices for PVC in 2002.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trikem&#146;s volume of caustic soda sales increased by 11.8% to 400.8 thousand
tons in 2002 as compared to 358.7 thousand tons in 2001, principally due to
higher domestic demand for caustic soda stemming from the termination, in
February 2002, of the Brazilian government&#146;s electric energy rationing program
initiated in June 2001. Average domestic prices for caustic soda decreased by
48.3% to U.S.$190.7 per ton in 2002 as compared with U.S.$368.9 per ton in
2001, following the trend in international market prices for caustic soda in
2002.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Cost of Sales and Gross Profit.</u> Cost of sales of the Vinyls segment
increased by 171.6% during 2002 to U.S.$289.5&nbsp;million from U.S.$106.6&nbsp;million
during 2001. This increase was primarily attributable to the effects of the
OPP Produtos Merger.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross profit of the Vinyls segment increased by 141.9% to U.S.$114.4
million in 2002 from U.S.$47.3&nbsp;million in 2001, resulting in a gross margin for
2002 of 28.3% and of 30.7% in 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of sales of Trikem increased by 3.2% during 2002 to U.S.$289.5
million from U.S.$280.6&nbsp;million during 2001. This increase was primarily
attributable to the 6.1% higher sales volume of the segment&#146;s main products
(PVC, caustic soda and EDC), as well as to higher plant insurance expenses
booked in the period. Purchases by Trikem of raw materials from the Company
decreased by 6.2% in 2002 to U.S.$120.8&nbsp;million from U.S.$128.8&nbsp;million in
2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross profit of Trikem decreased by 22.7% to U.S.$114.4&nbsp;million in 2002
from U.S.$148.0&nbsp;million in 2001, resulting in a gross margin for 2002 of 28.3%,
as compared with 34.5% in 2001 which reflects the impacts of the 8.4% decrease
in net sales and the 3.2% increase in cost of sales.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Operating Income.</u> The operating income of the Vinyls segment declined by
20.8% to U.S.$18.7&nbsp;million during 2002 as compared to U.S.$23.6&nbsp;million in
2001. The operating margin for 2002 was 4.6% as compared to 15.3% in 2001.
This reduction was primarily attributable to: (1)&nbsp;additional U.S.$46.7&nbsp;million
in expenses in 2002 associated with the full amortization of the deferred
exchange rate valiance in 2001; (2)&nbsp;certain non-recurring expenses incurred in
2002 and associated with the integration and restructuring process that
resulted in the formation of the Company; see &#147;Item&nbsp;4. Information on the
Company&#151;History and Development of the Company&#148;; and (3)&nbsp;the variations
discussed above (net sales and cost of sales).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trikem&#146;s operating income declined by 81% to U.S.$18.7&nbsp;million during 2002
as compared with U.S.$98.6&nbsp;million in 2001. Trikem&#146;s operating margin for 2002
was 4.6% as compared with 23% in 2001, principally as a result of: (1)
an additional U.S.$46.7&nbsp;million in expenses in 2002 associated with the full
amortization of the deferred exchange rate valiance in 2001 (such expenses
amounted to U.S.$13.1&nbsp;million in 2001); (2)&nbsp;certain non-recurring expenses
incurred in 2002 and associated with the integration and restructuring process
that resulted in the formation of the Company; see &#147;Item&nbsp;4. Information on the
Company&#151;History and Development of the Company&#148;; and
(3)&nbsp;the variations
discussed above (net sales and cost of sales). The original deferral
of the exchange rate variance in 2001 had been recorded only in the
Brazilian Corporate Law financial statements and not in the U.S. GAAP
financial statements.
</FONT>
<P align="center"><FONT size="2">84</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Business Development</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>The financial information with respect to the Business Development segment
is derived from the financial statements of the Company for the years ended
December&nbsp;31, 2002 and 2001. In accordance with SFAS 131, the segment data
included in the Company&#146;s financial statements is presented under the Brazilian
Corporate Law accounting principles. The financial information with respect to
Nitrocarbono is based on financial records of Nitrocarbono for the four months
ended December&nbsp;31, 2002 and financial information with respect to the
operations of the business of Proppet is based on the financial records of the
Company. The Business Development Unit of the Company is responsible for
managing certain of the Company&#146;s minority investments, principally its
investments in Petroflex and Cetrel. However, as the results of the Company&#146;s
investments managed by the Business Development Unit are reported as equity in
earnings (losses)&nbsp;of affiliates, the results of these companies are not
included in the segment discussions included below.</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Net Revenue.</u> Net revenue of the Business Development segment increased by
225.7% during 2002 to U.S.$92.5&nbsp;million from U.S.$28.4&nbsp;million during 2001.
This increase was primarily attributable to the effects of the Nova Cama&#231;ari
Acquisition, coupled with the 52114 Merger, which collectively resulted in a
154.5% increase in the sales volume of PET to 61.3 thousand tons in 2002 as
compared with 24.1 thousand tons in 2001, as well as to the inclusion of the
sales volume of caprolactam of 40.9 thousand tons in the sales of the Business
Development segment&#146;s for the last four months of 2002. Net revenue of the
Business Development segment from export sales was
U.S.$6.0&nbsp;million during 2002.  There were no exports during 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net sales of Nitrocarbono and Proppet, the companies that comprise the
Business Development segment, on a combined basis, increased by 44.8% during
2002 to U.S.$92.5&nbsp;million from U.S.$63.9&nbsp;million during 2001. This increase
was primarily attributable to: (1)&nbsp;an increase during 2002 of 12.9% in PET
sales volume; (2)&nbsp;an increase during 2002 of 27.2% in DMT sales volume; and (3)
the inclusion of net sales of caprolactam by Nitrocarbono of U.S.$20.1&nbsp;million
in the last four months of 2002. Gross export sales, net of discounts, returns
and allowances, increased by U.S.$5.9&nbsp;million during 2002 to U.S.$6.0&nbsp;million
during 2001. This increase is primarily attributable to the effects of the
52114 Merger which included net sales of Nitrocarbono for the last
four months of 2002.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales volume of PET by Proppet increased by 12.9% to 59.8 thousand tons in
2002 as compared to 53.0 thousand tons in 2001, principally due to operating
improvements realized during 2002 which permitted the Company&#146;s PET production
facility to increase its level of production. Average domestic prices for PET
decreased by 16.7% to U.S.$907.0 per ton in 2002 as compared to U.S.$1,090.0
per ton in 2001, following the trend in international market prices for PET in
2002.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales volume of caprolactam by Nitrocarbono were 15.1 thousand tons in
2002, and the average domestic price for this product during 2002 was
U.S.$1,332.0 per ton.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Cost of Sales and Gross Profit.</u> Cost of sales of the Business
Development segment increased by 224.6% during 2002 to U.S.$77.9&nbsp;million from
U.S.$24.0&nbsp;million during 2001, reflecting the effects of the 52114 Merger. The
Business Development segment purchased U.S.$15.1&nbsp;million of raw materials from
the Basic Petrochemicals segment in 2002.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross profit of the Business Development segment increased by 231.8% to
U.S.$14.6&nbsp;million in 2002 from U.S.$4.4&nbsp;million in 2001, resulting in a gross
margin for 2002 of 15.8% as compared to 15.6% in 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of sales of Nitrocarbono and Proppet on a combined basis increased by
38.3% during 2002 to U.S.$77.9&nbsp;million from U.S.$56.3&nbsp;million during 2001.
This increase was primarily attributable to: (1)&nbsp;an increase during 2002 of
12.9% in PET sales volume; (2)&nbsp;an increase of 27.2% during 2002 in DMT sales
volume; and (3)&nbsp;net sales by Nitrocarbono of caprolactam of U.S.$20.1&nbsp;million
during the last four months of 2002, which corresponded to 38.6% of the
combined net sales of Nitrocarbono and Proppet. Purchases of raw materials
from the Company by Nitrocarbono and Proppet on a combined basis increased by
5% in 2002 to U.S.$25.0&nbsp;million from U.S.$23.8&nbsp;million in 2001.
</FONT>
<P align="center"><FONT size="2">85</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross profit of Nitrocarbono and Proppet on a combined basis increased by
91.3% to U.S.$14.6&nbsp;million in 2002 from U.S.$7.6&nbsp;million in 2001, thus
resulting in a gross margin for 2002 of 15.8% as compared with 12% in 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Operating Income (Loss).</u> The operating income of the Business Development
segment increased by 78.1% to U.S.$5.7&nbsp;million during 2002 as compared to
U.S.$3.2&nbsp;million in 2001. Operating margin for 2002 was 6.2% as compared to
11.3% in 2001, principally as a result of the effects of the 52114 Merger.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The operating income of Nitrocarbono and Proppet on a combined basis
increased by 7.5% to U.S.$5.7&nbsp;million during 2002 as compared with U.S.$5.3
million in 2001. Operating margin during 2002 was 6.2% as compared with 8.3%
during 2001, principally because the 52114 Merger included four months
of Nitrocarbono&#146;s operations in its 2002 results, thus representing additional selling, general and
administrative expenses of U.S.$3.6&nbsp;million in 2002.
</FONT>
<P align="left"><FONT size="2"><B><I>Year Ended December&nbsp;31, 2001 Compared with Year Ended December&nbsp;31, 2000</I></B>
</FONT>

<P align="left"><FONT size="2"><I>Consolidated Results</I></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Net Sales.</u> Net sales of the Company increased by 13.9% during fiscal year
2001 to U.S.$1,771.9&nbsp;million as compared to U.S.$1,555.1&nbsp;million in fiscal year
2000, primarily as a result of the inclusion of the net sales of the
Polyolefins, Vinyls and Business Development Units. In addition, revenues for
the Basic Petrochemicals segment, which represents the only business segment
included in the historical financial results for the full years 2001 and 2000,
decreased by 15.2% to U.S.$1,331.0&nbsp;million in 2001 from U.S.$1,568.7&nbsp;million in
2000.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Cost of Sales and Gross Profit.</u> Cost of sales increased by 15.6% during
fiscal year 2001 to U.S.$1,447.2&nbsp;million as compared to U.S.$1,252.4&nbsp;million
during fiscal year 2000, primarily as a result of the inclusion of the cost of
sales of the Polyolefins, Vinyls and Business Development Units. In addition,
cost of sales and services for the Basic Petrochemicals segment decreased by
9.8% to U.S.$1,129.8&nbsp;million in 2001 from U.S.$1,252.4&nbsp;million in 2000.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result, gross profit increased by 7.3% in fiscal year 2001 to
U.S.$324.7&nbsp;million from U.S.$302.7&nbsp;million in fiscal year 2000. Gross margin
for 2001 was 18.3% as compared to 19.5% in 2000.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Selling,
General and Administrative Expenses.</u> Selling, general and
administrative expenses increased by 4.7% during selling, fiscal year 2001 to U.S.$80.6
million as compared to U.S.$77.0&nbsp;million during fiscal year 2000, primarily as
a result of the inclusion of the selling, general and administrative expenses of the
Polyolefins, Vinyls and Business Development Units.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Operating Income.</u> Operating income increased by 8.1% during fiscal year
2001 to U.S.$244.1&nbsp;million as compared to U.S.$225.7&nbsp;million during fiscal year
2000, primarily as a result of the inclusion of the operating income of the
Polyolefins, Vinyls and Business Development Units. In addition, operating
income for the Basic Petrochemicals segment decreased by 41.4% to U.S.$132.3
million in 2001 from U.S.$225.7&nbsp;million in 2000. Operating income represented
13.8% of net revenue during 2001 and 14.5% of net revenue during 2000.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Financial
Income.</u> Financial income decreased by 15.3% during fiscal year
2001 to U.S.$80.4&nbsp;million as compared to U.S.$94.9&nbsp;million during fiscal year
2000, primarily as a result of a decrease in 2001 of (1)&nbsp;average cash equivalents and
time deposits and (2)&nbsp;domestic interest rates.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Financial
Expenses.</u> Financial expenses increased by 119.9% during fiscal
year 2001 to U.S.$294.6&nbsp;million as compared to U.S.$134.0&nbsp;million during fiscal
year 2000. This increase was primarily as a result of additional indebtedness
incurred in connection with the Auction, as well as the inclusion of the
indebtedness of the Polyolefins, Vinyls and Business Development Units.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of
December&nbsp;31, 2001, the Company had outstanding contracts for
risk management purposes in the notional amount of U.S.$226.2&nbsp;million. The Company recognized
net gains of U.S.$6.2&nbsp;million on these contracts in 2001.
</FONT>
<P align="center"><FONT size="2">86</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Other Non-operating Expense.</u> Other non-operating expense increased by
952% during fiscal year 2001 to U.S.$26.3&nbsp;million as compared to U.S.$2.5
million during fiscal year 2001. This increase was primarily as a result of
the inclusion of other non-operating expenses of the Polyolefins, Vinyls
and Business Development Units.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Income Tax (Expense) Benefit.</u> In 2001, the Company recorded an income tax
benefit of U.S.$14.3&nbsp;million related to the recognition of a deferred income tax
asset in respect of the tax loss incurred in that year and tax effects of the change in
the net asset basis between U.S. GAAP and the Brazilian tax treatment.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2000, the Company recorded an income tax expense of U.S.$2.9&nbsp;million
due to the tax effects of the change in the net asset basis between U.S. GAAP and
the Brazilian tax treatment.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Equity in Earnings (Losses) of Affiliates, Net.</u> Equity in earnings
(losses)&nbsp;of affiliates, net was a loss of U.S.$6.1&nbsp;million during fiscal year
2001 as compared to a gain of U.S.$6.9&nbsp;million during fiscal year 2000. This
change was primarily as a result of (1)&nbsp;equity in losses of Politeno in an
amount of U.S.$8.2&nbsp;million in 2001 and (2)&nbsp;equity in earnings of Norcell in an
amount of U.S.$9.8&nbsp;million in 2000.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Minority Interest.</u> Minority interest was a loss of U.S.$63.8&nbsp;million
during fiscal year 2001 as compared to a gain of U.S.$15 thousand during fiscal
year 2001. This change was primarily as a result of the effects of the Nova
Cama&#231;ari Acquisition.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Net Income (Loss).</u> Net loss was U.S.$50.2&nbsp;million, or 2.8% of net sales,
during fiscal year 2001 as compared to net income of U.S.$188.0&nbsp;million, or
12.1% of net sales, during fiscal year 2000.
</FONT>
<P align="left"><FONT size="2"><I>Business Segment Results</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Basic Petrochemicals</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>The financial information with respect to the Basic Petrochemicals segment
is derived from the financial statements of the Company for the years ended
December&nbsp;31, 2001 and 2000. In accordance with SFAS 131, the segment data
included in the Company&#146;s financial statements is presented under the Brazilian
Corporate Law accounting principles.</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Net Revenue.</u> Net revenue of the Basic Petrochemicals segment decreased by
15.2% during 2001 to U.S.$1,331.0&nbsp;million from U.S.$1,568.7&nbsp;million during
2000. This decrease is primarily attributable to the reduction of 3.5% in the
sales volume of ethylene, from 1,103,800 tons in 2000 to 1,064,800 tons in
2001, as well as to the decrease of 15.1% in domestic prices of ethylene, from
U.S.$569 per ton in 2000 to U.S.$483 per ton in 2001. Sales of Utilities
accounted for 8.9% of net revenues of the Basic Petrochemicals segment in 2001,
totaling U.S.$119.0&nbsp;million, representing a 4% decrease when compared with
2000. Of these aggregate sales in 2001, U.S.$58.9&nbsp;million was attributable to
sales of steam, U.S.$50.7&nbsp;million was attributable to sales of electricity and
U.S.$9.3&nbsp;million was attributable to sales of water and compressed air.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net revenue of the Basic Petrochemicals segment from export sales
decreased by 25.2% during 2001 to U.S.$121.1&nbsp;million from U.S.$167.7&nbsp;million
during 2000. This decrease is primarily attributable to the decline of
international prices for petrochemical products in 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales volume of ethylene decreased by 3.5% to 1,064,800 tons in 2001 as
compared to 1,103,800 tons in 2000, principally due to the programmed
maintenance shutdown for 27&nbsp;days in August 2001 of one of the production
facilities for olefins. Average prices for ethylene decreased by 15.1% to
U.S.$483.0 per ton in 2001 as compared to U.S.$569.0 per ton in 2000, following
the trend in international market prices for petrochemical products in 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales volume of propylene decreased by 7.8% to 491,700 tons in 2001 as
compared to 533,500 tons in 2000, principally due to the programmed maintenance
shutdown for a period of 27&nbsp;days in August 2001 of one of the production
facilities for olefins. Average domestic prices for propylene decreased by
24.1% to U.S.$352 per ton in 2001 as compared with U.S.$464 per ton in 2000, following the trend in
international market prices for petrochemical products in 2001.
</FONT>
<P align="center"><FONT size="2">87</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Cost of Sales and Gross Profit.</u> Total cost of sales of the Basic
Petrochemicals segment decreased by 9.8% during 2001 to U.S.$1,129.8&nbsp;million
from U.S.$1,252.3&nbsp;million during 2000. This decrease is primarily attributable
to the lower volume of petrochemicals sold in 2001 in view of the
aforementioned maintenance shutdown, as well as to the decrease of 8.3% in
average naphtha prices in 2001 compared to 2000.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross profit of the Basic Petrochemicals segment decreased by 36.4% to
U.S.$201.2&nbsp;million in 2001 from U.S.$316.4&nbsp;million in 2000, thus resulting in a
gross margin for 2001 of 15.1% and of 20.2% for 2000.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Operating Income.</u> Operating income of the Basic Petrochemicals segment
decreased by 39.4% to U.S.$132.3&nbsp;million during 2001 as compared with
U.S.$218.3&nbsp;million in 2000. Operating margin for 2001 was 9.9% as compared to
13.9% in 2000, principally as a result of the decline in the gross margin of
this segment, which decline was partially offset by a U.S.$14.3&nbsp;million charge
for the settlement of VAT claims that was incurred in 2000 that did not have a
corresponding charge in 2001.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Polyolefins</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company&#146;s Polyolefins segment was acquired in the OPP Produtos Merger.
As such, the results of operations of this segment were not included in the
historical 2000 results of operations, and therefore, the increases in this
segment&#146;s operating results are the direct result of the OPP Produtos Merger
and the Nova Cama&#231;ari Acquisition.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Vinyls</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s Vinyls segment was acquired in the OPP Produtos Merger. As
such, the results of operations of this segment were not included in the
historical 2000 results of operations, and therefore, the increases in this
segment&#146;s operating results are the direct result of the OPP Produtos Merger.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Business Development</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s Business Development segment was acquired in the Nova
Cama&#231;ari Acquisition and the 52114 Merger. As such, the results
of operations for this segment were not included in the historical
2000 results of operations,
and therefore, the increases in this segment&#146;s operating results are the
direct result of the Nova Cama&#231;ari Acquisition and the 52114 Merger.
</FONT>

<P align="left"><FONT size="2"><B>Supplemental Unaudited Pro Forma Discussion</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The pro forma information is presented for informational purposes only and
is not necessarily indicative of the results of operations of the Company that
would have occurred had the Nova Cama&#231;ari Acquisition and the Related Party
Mergers been consummated on January&nbsp;1, 2001. In addition, the pro forma
operating results are not necessarily indicative of the future operating
results of the Company. Management expects that the strategic benefits of the
Related Party Mergers will result in incremental revenue and cost-savings
opportunities; however, such incremental revenues or cost savings have not been
reflected in the pro forma operating results.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pro forma adjustments to record the Nova Cama&#231;ari Acquisition and the
Related Party Mergers as of January&nbsp;1, 2001 include the following:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The inclusion of the results of operations of each of the companies
included in the Nova Cama&#231;ari Acquisition, as well as OPP Produtos and
its subsidiaries, for the period from January 1 to July&nbsp;25, 2001, the
date of the Nova Cama&#231;ari Acquisition.</FONT></TD>
</TR>
</TABLE>

<P align="center"><FONT size="2">88</FONT>

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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">An adjustment to the depreciation expense of the companies included
in the Nova Cama&#231;ari Acquisition, representing the depreciation expense
for the period from January 1 to July&nbsp;25, 2001, based upon the fair value
adjustment of these companies&#146; fixed assets recorded as part of the
purchase accounting process.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">An adjustment to interest expense for the period from January 1 to
July&nbsp;25, 2001, representing the interest expense on the loans
incurred in connection with the Nova Cama&#231;ari Acquisition, as if such
loans had been contracted on January&nbsp;1, 2001.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Elimination of intercompany revenues and expenses involving the
companies included in the pro forma presentation.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Inclusion of the estimated income tax and social contribution
effects of the above adjustments.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth certain pro forma consolidated financial
information of the Company for the years ended December&nbsp;31, 2002 and 2001,
giving effect to the Nova Cama&#231;ari Acquisition and the Combined Companies
Mergers and the Related Party Mergers as if the Nova Cama&#231;ari Acquisition and
Related Party Mergers had occurred on January&nbsp;1, 2001.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="95%">
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="7"><FONT size="1"><B>(in thousands of U.S. dollars, except percentages)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$2,391,116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$2,401,450</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cost of sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,900,987</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,872,088</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gross profit</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">490,129</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">529,362</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Selling, general and administrative expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(252,475</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(176,675</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Credit
from Federal Excise Tax (IPI)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">284,509</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating income (loss)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">522,163</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">352,687</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Financial income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">167,854</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">173,461</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Financial expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,159,842</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(798,353</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other non-operating expenses, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(57,281</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(37,811</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income tax and social contribution (expense)&nbsp;benefit</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(20,422</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">33,316</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Equity in earnings (losses)&nbsp;of affiliates</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22,467</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(3,190</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Minority interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">65,024</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(42,570</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cumulative effect of change in accounting principle, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,767</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">


<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loss</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$(460,037</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$(320,693</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gross Margin (%)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating Margin (%)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">21.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2"><B><I>Year Ended December&nbsp;31, 2002 Compared with Year Ended December&nbsp;31, 2001</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Net Revenue.</u> Net revenue of the Company decreased by 0.4% during fiscal
year 2002 to U.S.$2,391.1&nbsp;million as compared to U.S.$2,401.5&nbsp;million during
fiscal year 2001 primarily as a result of the scheduled shutdown at the
pyrolysis plant of the Olefins 1 Unit of the Basic Petrochemical Unit, that was
the major cause for the 6.6% decrease in the sales volume of ethylene. In
addition, the decrease of the prices of the thermoplastic resins and
basic petrochemicals products in the domestic market in 2002, in line with the
decrease in international prices, more than offset the increase of 7% in
the sales volume of thermoplastic resins. Export sales represented 22.4% of
total net revenue in 2002.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Costs of Sales and Services and Gross Profit.</u> Cost of sales and services
increased by 1.5% during fiscal year 2002 to U.S.$1,901.0&nbsp;million as compared
to U.S.$1,872.1&nbsp;million during 2001. Although naphtha and ethylene prices paid
by Braskem decreased in 2002 when compared to 2001, the increase in fixed costs
due to the aforementioned scheduled shutdown of the Basic Petrochemicals Unit and an
increase in the insurance costs for the Company&#146;s industrial facilities more
than offset the decrease in naphtha and ethylene prices, the main raw materials
of the Company.
</FONT>
<P align="center"><FONT size="2">89</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of the items discussed above, on a pro forma basis, gross
profit decreased by 7.4% in fiscal year 2002 to U.S.$490.1&nbsp;million from
U.S.$529.4&nbsp;million in fiscal year 2001. Gross margin for 2002 was 20.5% as
compared to 22% in 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Selling, General and Administrative Expenses.</u> Selling, general and
administrative expenses increased by 42.9% during fiscal year 2002 to U.S.$252.5
million as compared to U.S.$176.7&nbsp;million in fiscal year 2001. This increase
was mainly caused by the impact of non-recurring expenses related to the
Company&#146;s corporate restructuring process in 2002. Selling, general and administrative expenses
represented 10.6% of the Company&#146;s net revenue in 2002 and 7.4% of the
Company&#146;s net revenue in 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Credit from Federal Excise Tax (IPI).</u> The Company recorded revenues of
U.S.$284.5&nbsp;million in 2002 relating to a credit for IPI in respect of taxes
paid for raw materials that are in a zero percent tax bracket, which amount
includes approximately U.S.$75.0&nbsp;million that had already been offset against
taxes payable in prior years. In connection with the recognition of this
revenue, the Company recognized a portion of this amount in taxes recoverable, including
U.S.$67.5&nbsp;million as current assets and U.S.$148.8&nbsp;million as non-current
assets. See &#147; &#151;  Effect of Taxes on the Company&#146;s Income &#151; Other Taxes &#151;
Federal Excise Tax (IPI).&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Operating Income.</u> Operating income increased by 48.1% during fiscal year
2002 to U.S.$522.2&nbsp;million as compared to U.S.$352.7&nbsp;million in fiscal year
2001. The major contributor to this variation was the recognition by the
Company in 2002 of IPI tax credits in an aggregate amount of U.S.$284.5
million. Operating income represented 21.8% of net revenue during 2002 and
14.7% of net revenue during 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Financial Income.</u> Financial income in fiscal year 2002 amounted to
U.S.$167.9&nbsp;million, practically in line with U.S.$173.5&nbsp;million in financial
income in fiscal year 2001. Financial income represented 7% of the Company&#146;s
net revenue during 2002 and 7.2% of the Company&#146;s net revenue during 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Financial
Expenses.</u> Financial expenses increased by 45.3% during fiscal
year 2002 to U.S.$1,159.8&nbsp;million as compared to U.S.$798.4&nbsp;million in fiscal
year 2001. The increase in financial expenses was due to the higher
devaluation of the <I>real </I>in relation to the U.S. Dollar in 2002, as compared to
the devaluation that occurred in 2001 (34.3% in 2002 and 15.7% in
2001).
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Other Non-operating Expense, Net.</u> Other non-operating expenses, net,
increased by 51.5% during fiscal year 2002 to U.S.$57.3&nbsp;million as compared to
U.S.$37.8&nbsp;million in fiscal year 2001. The increase in other non-operating
expenses, net, was caused primarily by the write-off by the Company of certain
obsolete assets in 2002.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Income Tax and Social Contribution.</u> Income tax and social contribution
was an expense in the amount of U.S.$20.4&nbsp;million during fiscal year 2002 as
compared to a credit of U.S.$33.3&nbsp;million in fiscal year 2001. Income tax and
social contribution was an expense in 2002 because, despite the fact that the
Company incurred a loss in 2002, its subsidiary OPP Qu&#237;mica had taxable income
in 2002 primarily as a result of its recognition of IPI tax credits during that
year. Income tax and social contribution was a credit in 2001 due to
the recording of a deferred tax credit in respect of losses sustained by the
Company during 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Equity in Earnings (Losses) of Affiliates.</u> Equity in earnings (losses)&nbsp;of
affiliates increased during fiscal year 2002 to equity in earnings of
affiliates of U.S.$22.5&nbsp;million as compared to equity in losses of affiliates
of U.S.$3.2
million in fiscal year 2001. The increase in equity in earnings (losses)
of affiliates in 2002 was primarily caused by (1)&nbsp;an increase of approximately
U.S.$6.0&nbsp;million in the equity in earnings of Copesul in 2002 as compared to
2001 and (2)&nbsp;equity in earnings of Politeno in an amount of U.S.$13.0&nbsp;million
in 2002 as compared to equity in losses of Politeno in an amount of U.S.$8.2
million in 2001. Copesul and Politeno are among the Company&#146;s affiliates
included in equity in earnings (losses)&nbsp;of affiliates.
</FONT>
<P align="center"><FONT size="2">90</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Minority Interest.</u> Minority interest amounted to a gain of U.S.$65.0
million in 2002&nbsp;million as compared to a loss of U.S.$42.6&nbsp;million in fiscal
year 2001. The gain recorded in 2002 offset the proportion of the losses
sustained by Trikem during that year (approximately U.S.$130.0&nbsp;million) that
are attributable to the interests in Trikem held by Trikem&#146;s minority
shareholders. In addition, the gain in 2002 was partially offset by a loss in
minority interest corresponding to the proportion of income earned by Polialden
during 2002 that is attributable to the interests in Polialden held by its
minority shareholders. In 2001, both Trikem and Polialden recorded net income,
a proportion of which was offset by the Company to reflect the proportional
interests of the minority shareholders in these companies.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Loss.</u>
Loss increased by 43.5% during fiscal year 2002 to
U.S.$460.0&nbsp;million as compared to a loss of U.S.$320.7&nbsp;million in fiscal
year 2001. The key factors for the increase in the loss between these
two years were the 7.4% decrease in the gross profit, the 45.3% increase in the
financial expenses and the 42.9% increase in the selling, general and
administrative expenses. These factors altogether, more than offset the
non-recurring gains associated with the IPI tax credit.
</FONT>
<P align="left"><FONT size="2"><B>Liquidity and Capital Resources</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s principal cash requirements consist of the following:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">working capital needs;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the servicing of the Company&#146;s indebtedness;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">capital expenditures related to investments in operations and property, plant and equipment; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">dividend payments on its shares.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s principal sources of liquidity have traditionally consisted
of cash flows from operating activities and short-term, and long-term secured
borrowings, including pre-export financings. The Company is seeking to extend
the overall maturity of its outstanding indebtedness by refinancing certain
portions of its indebtedness that come due in the latter half of 2003 and
during 2004. The Company believes that this extension of its debt maturities
is important in order to better match the Company&#146;s cash generation capacity
with its debt service and capital expenditure obligations. The Company is also
seeking to sell certain of its non-core assets. See
&#147;&#151;&nbsp;Working Capital&#148; and &#147;Indebtedness and Financing Strategy &#151; Long-term
Indebtedness &#151; Notes.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s cash and cash equivalents at December&nbsp;31, 2002 and 2001 were
U.S.$35.5&nbsp;million and U.S.$109.2&nbsp;million. The decrease in the amount of the
Company&#146;s cash and cash equivalents at the end of 2002 compared to the end of
2001 was principally due to net cash used in financing activities, despite the
positive operating cash flow. The Company does not have any material unused
sources of liquidity.
</FONT>
<P align="left"><FONT size="2"><B><I>Working Capital</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company had consolidated negative working capital (current assets
minus current liabilities) of U.S.$594.7&nbsp;million at December&nbsp;31, 2002
(U.S.$610.2&nbsp;million at December&nbsp;31, 2001). Part of the Company&#146;s debt strategy
over the next few years involves the use of a substantial portion of its
consolidated cash flow (including from synergies resulting from the mergers
that formed part of its consolidation and from, possibly, the sale of certain
non-core assets) to pay principal and interest with respect to this
indebtedness, including by repaying short-term debt through longer-term
borrowings and issuing longer-term debt securities. Any failure by the Company
to refinance indebtedness coming due during the next 12-18&nbsp;months that it does
not repay using cash flow generated from its operations and from the sale of
non-core assets would adversely affect the Company and its financial condition.
See &#147;Item&nbsp;3. Key Information &#151; Risk Factors &#151; Risks Relating to the Company
&#151; The Company&#146;s indebtedness will require that a
significant portion of its
cash flow be used to pay the principal and interest with respect to that
indebtedness.&#148;
</FONT>
<P align="center"><FONT size="2">91</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company has short-term finance lines denominated in <I>reais</I> with many of
the most important banks operating in Brazil. Although the Company has no
committed lines of credit with these banks, the Company&#146;s management believes
that the Company will continue to be able to obtain sufficient credit to
finance its working capital needs.
</FONT>
<P align="left"><FONT size="2"><B><I>Cash Flows</I></B>
</FONT>

<P align="left"><FONT size="2"><I>Cash flows from operating activities</I></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash from operating activities was U.S.$429.6&nbsp;million in 2002 and
U.S.$124.4&nbsp;million in 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s cash flows from operating activities in 2002 reflected an
245.3% increase over 2001, principally due to an increase in liabilities with
suppliers, other taxes and advances from customers.
</FONT>
<P align="left"><FONT size="2"><I>Cash flow from investing activities</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investing activities, primarily including acquisitions, other capital
expenditures and investments in and loans to affiliated companies, used net
cash flow of U.S.$217.2&nbsp;million in 2002 compared to using net cash flow of
U.S.$118.5&nbsp;million in 2001. Cash flows used in investing activities in 2002
were mainly composed of additions to property and equipment related to
revamping and maintaining the pyrolysis plant of the Olefins Unit 1 of the
Company&#146;s Basic Petrochemicals Unit.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash flows used in investing activities in 2001 were mainly composed of
the investment in the Nova Cama&#231;ari Acquisition, partially offset by U.S.$147.6
million generated from cash and cash equivalents of the merged companies and
from a reduction in short-term and long-term investments.
</FONT>
<P align="left"><FONT size="2"><I>Cash flow from financing activities</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financing activities (before distributions to shareholders), which include
short-term and long-term secured and unsecured borrowings, and debt
repayments,
used net cash flows of U.S.$191.1&nbsp;million in 2002, compared to providing net
cash flows of U.S.$91.2&nbsp;million in 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the year ended December&nbsp;31, 2002, the Company&#146;s issuance and
repayments of debt were U.S.$1,701.3&nbsp;million and U.S.$1,852.3&nbsp;million,
respectively. During the year ended December&nbsp;31, 2001, the Company&#146;s issuance
and repayments of debt were U.S.$1,491.6&nbsp;million and U.S.$1,382.8&nbsp;million,
respectively.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2002, the Company&#146;s principal source of long-term borrowed funds was an
issuance of unsecured convertible debentures in an aggregate amount of
U.S.$241.8&nbsp;million, and an export prepayment financing in an aggregate amount
of U.S.$97.2&nbsp;million. At December&nbsp;31, 2002, these debentures and this export
prepayment financing had outstanding principal balances of U.S.$182.1&nbsp;million
and U.S.$97.2&nbsp;million, respectively. In 2001,
the Company&#146;s principal source of long term borrowed funds was (1)&nbsp;the
issuance by the Company of two series of secured, non-convertible debentures,
in an aggregate amount of U.S.$176.3&nbsp;million and (2)&nbsp;an export prepayment
credit agreement in an aggregate amount equal to U.S.$300.0&nbsp;million.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company paid cash dividends and interest attributable to shareholders&#146;
equity (including withholding taxes paid by the Company on behalf of its
shareholders in respect thereof) of U.S.$10.7&nbsp;million and U.S.$39.9&nbsp;million,
respectively, for the years ended December&nbsp;31, 2002 and 2001.
</FONT>
<P align="center"><FONT size="2">92</FONT>
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<P align="left"><FONT size="2"><B>Contractual Commitments</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table summarizes significant contractual obligations and
commitments as of December&nbsp;31, 2002 that impact the Company&#146;s liquidity:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="90%">
<TR valign="bottom">
    <TD width="49%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="27"><FONT size="1"><B>Payments Due by Period (in millions of U.S. dollars)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2004</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2005</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2006</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2007</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Thereafter</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Long-term debt, including current portion</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">413.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">363.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">158.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">131.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">405.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,471.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Debentures</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">154.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">182.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">345.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Purchase obligations (1)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">110.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">110.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">110.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">110.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">110.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">653.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,205.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total Contractual obligations</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">532.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">628.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">268.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">241.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">697.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">654.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,023.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Purchase commitments of raw materials and electric power based upon the
applicable purchase price as of December&nbsp;31, 2002.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, the Company is subject to contingencies with respect to tax,
labor, distributors, and other claims and has made provisions for accrued
liability for legal proceedings related to certain tax claims of U.S.$209.4
million at December&nbsp;31, 2002. The tax contingencies relate primarily to the
Contribution for Social Security Financing, Social Integration
Program, the Federal Excise Tax (IPI), the corporate income tax and social security
contributions. See &#147;Item&nbsp;8. Financial Information &#151; Legal Proceedings&#148; and
Note 13 to the Consolidated Financial Statements.
</FONT>
<P align="left"><FONT size="2"><B>Indebtedness and Financing Strategy</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2002, the Company&#146;s aggregate outstanding debt
(including short-term debt, current portion of long-term debt, long-term debt
and debentures) was U.S.$2,120.7&nbsp;million, consisting of short-term debt,
current portion of long-term debt and current portion of debentures included in
current liabilities of U.S.$725.1&nbsp;million and long-term debt and debentures
(excluding the current portion) in long-term liabilities of U.S.$1,395.6
million.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s debt consisted of U.S.$706.1&nbsp;million of <I>real</I>-denominated
debt and U.S.$1,414.6&nbsp;million of foreign currency-denominated debt. See &#147;Item
11. Quantitative and Qualitative Disclosures About Market Risk&#148; for
information regarding the Company&#146;s interest rate exposure, its average
maturity and its policy with respect to mitigating foreign currency risks
through the use of financial instruments and derivatives.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s cash interest expense was U.S.$274.8&nbsp;million and U.S.$174.4
million for 2002 and 2001, respectively.
</FONT>
<P align="left"><FONT size="2"><B><I>Short-term Indebtedness</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the last three years, the Company has instituted a policy of
attempting to reduce its short-term debt and the current portion of its
long-term debt as much as possible taking into account market conditions in
Brazil. The Company successfully reduced its short-term debt (including the
current portion of long-term debt and debentures) to U.S.$725.1&nbsp;million as of
December&nbsp;31, 2002, from U.S.$840.0&nbsp;million as of December&nbsp;31, 2001. As of
December&nbsp;31, 2002, the Company&#146;s outstanding short-term debt consisted
primarily of advances on export
contracts and working capital debt with Brazilian financial institutions
and discounting of domestic trade receivables.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has short-term finance lines denominated in <I>reais </I>with a
number of financial institutions operating in Brazil. Although the Company has
no committed lines of credit with these banks, the Company&#146;s management
believes that the Company will continue to be able to obtain sufficient credit
to finance its working capital needs.
</FONT>
<P align="left"><FONT size="2"><B><I>Long-term Indebtedness</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s long-term debt consists primarily of notes issued in the
Brazilian and foreign capital markets, borrowings under credit agreements and
pre-export financings.
</FONT>
<P align="center"><FONT size="2">93</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sets forth below are descriptions of certain significant financing
transactions of the Company.
</FONT>
<P align="left"><FONT size="2"><B><I>Debentures</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On October&nbsp;1, 2001, the Company&#146;s predecessor, Copene, issued the tenth
issue of secured non-convertible debentures (the &#147;Tenth Issue&#148;) in Brazil. The
Tenth Issue was issued in two series and is secured by a &#147;<I>garantia flutuante</I>,&#148;
or a floating lien over all of the Company&#146;s Basic Petrochemicals Unit&#146;s
assets. Copene used the proceeds from the debentures to refinance in part its
obligations in connection with the acquisition of the ESAE Assets in the
Auction. See &#147;Item&nbsp;4. History and Development of the Company.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At December&nbsp;31, 2002, the aggregate outstanding amount of the first series
of these debentures was U.S.$100.4&nbsp;million. Interest on the first series
accrues at the rate per annum of 118.3% of the <I>Certificado Dep&#243;sito
Interbanc&#225;rio </I>(the Brazilian interbank rate, or CDI), since December&nbsp;1, 2002
(110% of CDI through November&nbsp;30, 2002). Interest on the first series is
payable semi-annually, and the first series matures on October&nbsp;1, 2006.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At December&nbsp;31, 2002, the aggregate outstanding amount of the second
series was U.S.$63.4&nbsp;million. Interest on the second series accrues at a rate
of 13.3% per annum, and the principal amount is adjusted for inflation on each
payment date using the IGP-M. Interest on the second series is payable
annually, and the second series matures on October&nbsp;1, 2006.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The initial interest rates described above in respect of both series of
debentures will be in effect until October&nbsp;1, 2004, when the Company&#146;s Board of
Directors will establish new interest rates for the period commending on such
date through the final maturity date thereof. The Company must redeem in full
the debentures of any holders that do not accept the new interest rates
established by its Board of Directors.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Tenth Issue contains a number of covenants (calculated in accordance with accounting
principles determined by the Brazilian Corporate Law) including a maximum net
debt to EBITDA ratio (declining over time); a minimum EBITDA to net financial
expenses ratio (increasing over time); a maximum short-term debt to EBITDA
ratio (declining over time), which applies if the net debt to EBITDA ratio is
greater than specified levels or the maximum EBITDA to net financial expenses
ratio is less than specified levels; and limitations on dividend payments,
loans to shareholders and affiliates, asset sales, liens and mergers and
acquisitions.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On May&nbsp;31, 2002, OPP Produtos Petroqu&#237;micos issued registered,
subordinated convertible debentures in Brazil. As a result of the Related
Party Mergers, these debentures became obligations of the Company. At December
31, 2002, the aggregate outstanding principal amount of these debentures was
U.S.$ 182.1&nbsp;million. Interest on these debentures accrues at the <I>Taxa de Juros
de Longo Prazo</I>, or TJLP, the Brazilian National Bank for Economic and Social
Development&#146;s long-term interest rate, plus 5.0% per annum. Interest on these
debentures is fully capitalized until the maturity date of these debentures on
July&nbsp;31, 2007. The terms of these debentures provide that they (1)&nbsp;may not be
accelerated, redeemed, prepaid, renegotiated or amended and (2)&nbsp;are
subordinated to the Tenth Issue and to a U.S.$250&nbsp;million export pre-payment
credit agreement, which is more fully discussed in &#147; &#151; Export Pre-Payment
Facilities.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The holders of these debentures have the option at any time before
maturity to convert their debentures into shares of the Company&#146;s capital
stock. The initial conversion price is R$975.2 (equivalent to U.S.$276 using
the <I>real</I>/U.S. dollar exchange rate at December&nbsp;31, 2002) of debentures, plus
accrued interest, per 1,000 class A preferred shares. Upon conversion, the
Company is required to issue class A preferred shares up to the legal limit for
preferred shares of 66.6% of its total capital stock. After this 66.6% limit is
reached, the Company is required to issue any remaining shares to be converted
in the following proportions: one-third in common shares and two-thirds in
class A preferred shares.
</FONT>
<P align="left"><FONT size="2"><B><I>Notes</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February&nbsp;23, 1996, OPP Petroqu&#237;mica issued and sold U.S.$125.0&nbsp;million
aggregate principal amount of unsecured 11.5% Notes due 2004 pursuant to Rule
144A and Regulation&nbsp;S under the Securities Act. Interest on these notes is
payable semi-annually in arrears in February and August in each year, and the
notes mature on February&nbsp;22, 2004. As of December&nbsp;31, 2002, the outstanding
amount of these notes held by third parties was U.S.$28.0&nbsp;million. The
obligations under these notes were assumed by OPP Qu&#237;mica in December 2000,
when OPP Petroqu&#237;mica merged with and into OPP Qu&#237;mica, and then were assumed
by the Company as a result of the Related Party Mergers.
</FONT>
<P align="center"><FONT size="2">94</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On October&nbsp;29, 1996, OPP Petroqu&#237;mica issued and sold U.S.$100.0&nbsp;million
aggregate principal amount of unsecured 11% Notes due 2004, pursuant to Rule
144A and Regulation&nbsp;S under the Securities Act. Interest on these notes is
payable semi-annually in arrears of April and October in each year, and the
notes mature on October&nbsp;29, 2004. As of December&nbsp;31, 2002, the outstanding
amount of these notes held by third parties was U.S.$55.7&nbsp;million. The
obligations under these notes were assumed by OPP Qu&#237;mica in December 2000,
when OPP Petroqu&#237;mica merged with and into OPP Qu&#237;mica, and then were assumed
by the Company as a result of the Related Party Mergers.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By December&nbsp;31, 2002, Lantana Trading Company (then a subsidiary of OPP
Qu&#237;mica and currently a direct subsidiary of Braskem as a result of the Related
Party Mergers) had reacquired U.S.$180&nbsp;million of OPP Petroqu&#237;mica notes, and
had resold U.S.$37&nbsp;million.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;25, 1997, the Company issued and sold U.S.$150.0&nbsp;million aggregate
principal amount of unsecured 9% Notes due 2007 pursuant to Rule&nbsp;144A and
Regulation&nbsp;S under the Securities Act. Interest on these notes is payable
semi-annually in arrears in June and December in each year, and the notes
mature on June&nbsp;25, 2007. As of December&nbsp;31, 2002, the outstanding amount was
U.S.$261.8&nbsp;million.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;24, 1997, Trikem issued and sold U.S.$250.0&nbsp;million aggregate
principal amount of unsecured 10.6% Notes due 2007 pursuant to Rule&nbsp;144A and
Regulation&nbsp;S under the Securities Act. Interest on these notes is payable semi-annually in arrears in
January and July in each year, and these notes mature on July&nbsp;24, 2007. Trikem
has the right to repurchase these notes on July&nbsp;24 of each year beginning on
July&nbsp;24, 2002. As of December&nbsp;31, 2002, the outstanding amount of these Trikem
notes was U.S.$150.2&nbsp;million.
</FONT>
<P align="left"><FONT size="2"><B><I>Bank Credit Facilities</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In July 1999, Odequi Overseas Inc., now one of the Company&#146;s direct
subsidiaries (&#147;Odequi Overseas&#148;), received a loan in the principal amount of
U.S.$110.0&nbsp;million from a syndicate of financial institutions. Odequi Overseas
used the proceeds of this loan to acquire non-voting preferred shares of Odequi
and OPE Investimentos. Odequi Overseas pre-paid approximately U.S.$30.0&nbsp;million
of this loan prior to its amendment and restatement in July 2002. The amended
and restated loan is in the principal amount of U.S.$80.0&nbsp;million and matures
in July 2003. This loan bears interest at the rate of LIBOR plus 1.4% per annum
payable semi-annually in arrears in January and July of 2003. This loan is
secured by all of the non-voting preferred shares of Odequi and OPE
Investimentos, which shares are owned by Odequi Overseas. Odequi and OPE
Investimentos have agreed to pay dividends on the preferred shares in amounts
equal to the interest due on the Odequi Overseas loan and to redeem the
preferred shares for amounts that will be used by Odequi Overseas to pay the
principal of the loans. The
Company intends to refinance this debt on or prior to its maturity in July
2003. The outstanding balance of this loan as of December&nbsp;31, 2002 was
U.S.$80.0&nbsp;million.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January 1998, several financial institutions granted a loan in the
amount of U.S.$30.0&nbsp;million to Proppet to finance construction of its PET and
DMT plant in Cama&#231;ari, Bahia. This loan has since been amended to reflect,
among other provisions, the merger of Proppet into the Company. ODBPAR
Investimentos S.A., one of Braskem&#146;s shareholders (&#147;ODBPAR&#148;), Norquisa and
Mitsubishi have guaranteed this loan. ODBPAR and/or Norquisa have also agreed
to reimburse Mitsubishi for any payments that it makes in respect of this
guarantee if the Company defaults on its payment obligations under the loan. To
guarantee their reimbursement obligations, Norquisa and ODBPAR have
caused the Company to grant Mitsubishi a second mortgage on its DMT and PET real
properties and to pledge the equipment related to its DMT and PET production.
The outstanding balance of this loan as of December&nbsp;31, 2002 was U.S.$18.8
million.
</FONT>
<P align="center"><FONT size="2">95</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2"><B><I>Acquisition Financing</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In September 1992, Odequi purchased shares of PPH Companhia Industrial de
Polipropileno and Poliolefinas S/A, the predecessors to OPP Qu&#237;mica. Odequi
paid 10% of the purchase price in cash and the remaining 90% was financed by
Banco do Brasil over a 12-year term. The principal amount of this loan is
adjusted monthly for inflation, and the loan bears interest at the rate of 4.5%
per annum. Interest is payable semi-annually, and the principal amortizes in
17 semi-annual installments. The outstanding balance of this loan at December
31, 2002 was U.S.$34.9&nbsp;million. This loan is secured by the shares of OPP
Qu&#237;mica and is fully guaranteed by Odequi. As part of the
Company&#146;s corporate
restructuring, the obligations under this loan were fully assumed by OPP
Qu&#237;mica in December 2000 and were subsequently assumed by the
Company as a result of the
Related Party Mergers.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In September 2001, BNDESPAR sold one billion Class&nbsp;B preferred shares of
Conepar to Nova Cama&#231;ari for a purchase price of approximately U.S.$46.4
million, and as part of the transaction, BNDESPAR extended a loan to Nova
Cama&#231;ari in a principal amount equal to the purchase price. This loan bears
interest at the TJLP rate plus 4% per annum, payable annually each August&nbsp;15.
The principal amount of this loan is due on August&nbsp;15, 2006. BNDESPAR has the
option to convert the principal amount of this loan into the
Company&#146;s class A preferred
shares upon the maturity of this loan. At December&nbsp;31, 2002, the outstanding
amount of this loan was U.S.$50.0&nbsp;million. The obligations under this loan
were assumed by the Company in connection with its merger with Nova Cama&#231;ari.
</FONT>
<P align="left"><FONT size="2"><B><I>Export Prepayment Facilities</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December 2001, the Company&#146;s predecessor, Copene, entered into a
U.S.$250.0&nbsp;million syndicated credit agreement. The loan is secured by certain
of the
Company&#146;s exports. The loan was disbursed in two tranches. Copene used the
proceeds from these debentures to refinance in part its obligations in
connection with the acquisition of the ESAE Assets in the Auction. This credit
agreement was amended and restated in October and December 2002 to change the
terms of certain financial covenants and to add related definitions.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The first tranche of this loan in the principal amount of U.S.$80.0
million bears interest at the rate of three-month LIBOR plus 4.25% per annum,
payable quarterly in arrears. Principal on the first tranche is payable in
seven installments beginning in June 2003 and the final maturity is in December
2004. Amortization of the principal is scheduled to match sales of the
Company&#146;s exports
that are not pledged to support other obligations.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The second tranche of this loan in the principal amount of U.S.$170.0
million bears interest at the rate of three-month LIBOR plus 5.25% per annum,
payable quarterly in arrears. Principal on the second tranche is payable in 15
installments beginning in June 2003 and the final maturity of the second
tranche is in December 2006. Amortization of the principal is scheduled to
match sales of the Company&#146;s exports that are not pledged to support other
obligations. At December&nbsp;31, 2002, the principal amount outstanding to third
parties on the first and second tranches was U.S.$217.0&nbsp;million.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April 2001, Trikem received an export pre-payment loan of U.S.$50.0
million from two financial institutions. This loan matures in June 2004 and
bears interest at the rate of three-month LIBOR plus 2.375% per
annum payable quarterly in arrears. This loan amortizes in 14 equal
quarterly installments structured to correspond to excess distributions to
Trikem from the trust that issued the 6.7% Investor Certificates due 2004 as
part of an export securitization. This loan is secured by Trikem&#146;s right to
payments from the trustee. The Company guarantees Trikem&#146;s performance under
the loan documents. As of December&nbsp;31, 2002, the outstanding principal of this
loan was U.S.$16.4&nbsp;million.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;30, 1997, a trust formed by Trikem issued and sold U.S.$100
million aggregate principal amount of 6.7% Investor Certificates due 2004. The
Investor Certificates are to be paid from the proceeds of accounts receivable
generated from export sales of PVC and EDC by a subsidiary of Trikem to Nissho
Iwai Corporation. Interest is payable quarterly in arrears in March, June,
September and December of each year, and the Investor Certificates mature on
June&nbsp;1, 2004. The Investor Certificates represent fractional interests in the
trust whose sole asset is receivables generated pursuant to a supply agreement
with Nissho Iwai. Trikem agrees to sell PVC and EDC to its subsidiary so that
the subsidiary can sell the products to Nissho Iwai. Trikem&#146;s obligations to
sell products to its subsidiary is supported by a surety bond. Trikem also
guarantees payment of the Investor Certificates. The outstanding balance of
these Investor Certificates as of December&nbsp;31, 2002 was U.S.$72.2&nbsp;million.
</FONT>
<P align="center"><FONT size="2">96</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June 2000, OPP Petroqu&#237;mica entered into a prepayment advance for
products to be exported to a foreign customer in the amount of U.S.$75.3
million. This prepayment advance bears interest at the rate of six-month LIBOR
plus 1.7% per annum. The maximum term for shipment of the subject products
ends in December 2003. At December&nbsp;31, 2002, the unpaid principal amount of
this prepayment advance was approximately U.S.$49.7&nbsp;million. OPP Petroqu&#237;mica&#146;s
obligation to deliver export products is secured by a surety bond. The
obligations under this prepayment advance were assumed by OPP Qu&#237;mica in
December 2000 when OPP Petroqu&#237;mica merged with and into OPP Qu&#237;mica and were
assumed by the Company as a result of the Related Party Mergers.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December 2002, OPP Qu&#237;mica entered into a prepayment advance for
products to be exported to a foreign customer in the amount of U.S.$97.2
million. This prepayment advance bears interest at the rate of six-month LIBOR
plus 3.75% per annum. This prepayment advance will be paid through partial
semi-annual shipments from June 2003 to June 2006. At December&nbsp;31, 2002, the
unpaid principal amount of this prepayment advance was approximately U.S.$97.2
million. OPP Qu&#237;mica&#146;s obligation to deliver export products is guaranteed by
a surety bond. The obligations under this prepayment advance were assumed by
OPP Qu&#237;mica in December 2000 when OPP Petroqu&#237;mica merged with and into OPP
Qu&#237;mica and were assumed by the Company as a result of the Related Party
Mergers.
</FONT>
<P align="left"><FONT size="2"><B><I>BNDES Development Loans</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company maintains various credit facilities with BNDES to fund general
capital expenditures associated principally with the expansion of its
production capacity, environmental projects and the development of operation
control centers, laboratories and a waste treatment station, of which U.S.$76.2
million amount was outstanding at December&nbsp;31, 2002. Amounts borrowed from
BNDES are secured by a mortgage on certain real estate properties and a pledge
of certain equipment and machinery the Company owns. The interest rate on
amounts the Company borrowed from BNDES is based on a floating index
(the TJLP, a reference interest rate or the BNDES basket of
currencies), plus a margin of 3.9% to 10.8% per annum. The principal and interest on these credit facilities are
payable monthly through July 2007.
</FONT>

<P align="left"><FONT size="2"><B><I>Other</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Petrobras maintains a R$570.0&nbsp;million (equivalent to U.S.$161.3 at the
December&nbsp;31, 2002 <I>real</I>/U.S. dollar exchange rate) rotating naphtha supply line of credit with
the Company in respect of its supply of naphtha to the Company. As of February
24, 2003, the facility is guaranteed by the mortgage of two of OPP Qu&#237;mica&#146;s
industrial plants. The
Company is in the process of negotiating an additional credit facility
with Petrobras to be guaranteed by a mortgage on one of its plants in Triunfo,
in the State of Rio Grande do Sul.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has other financing transactions to finance its working
capital requirements and certain investments, which are guaranteed by its
shares and properties.
</FONT>
<P align="left"><FONT size="2"><B><I>Financing Strategy</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s financing strategy is to extend the average maturity of its
outstanding indebtedness, including by repaying short-term debt through
longer-term borrowings and issuing longer-term debt securities. In addition,
part of the Company&#146;s financing strategy over the next several years involves
the Company&#146;s use of a substantial portion of its consolidated cash flow
(including from synergies resulting from the mergers that formed part of the
Company&#146;s consolidation and possibly from the sale of certain non-core assets)
to pay principal and interest with respect to its outstanding indebtedness.
</FONT>
<P align="center"><FONT size="2">97</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;One of the Company&#146;s principal subsidiaries, Trikem, is party to certain
debt agreements that restrict its ability to transfer funds to the Company in
the form of cash dividends, loans or advances. As the Company does not reply
primarily on funding from its subsidiaries for working capital and other
purposes, these restrictions have not had, and are not expected to have, any
material adverse impact on the ability of the Company to meet its cash
obligations.
</FONT>
<P align="left"><FONT size="2"><B>Research and Development</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s policy is to maintain the level of research and development
expenditure necessary to enable it to be a &#147;fast follower&#148; of state-of-the-art
technologies. This policy is directed towards sustaining the Company&#146;s
performance and enhancing the efficiency of the Company&#146;s operations. In
addition to its small team of staff, the Company also places emphasis on bench
research and has links with research and development programs at the major
Brazilian universities as well as recognized foreign research and development
centers. During 2002, 2001 and 2000 the Company invested U.S.$5.7&nbsp;million,
U.S.$4.1&nbsp;million and U.S.$2.3&nbsp;million, respectively, in research and
development.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With the deregulation of the petrochemical sector, the Company&#146;s
technological activities have been directed to projects of a strategic nature,
aimed at increasing ethylene production capacity, development of new products and
processing of new raw materials. A German company, Linde A.G., was contracted
to prepare the engineering project for an increase of 80 thousand
tons in annual ethylene production capacity, as well as to develop the Conceptual Design
and Basic Engineering for a new Condensate Fractionation Unit. Other projects
have been developed in order to allow the upstream units to process these
higher capacities and improve their productivity.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company maintains a center for technology and innovation in Triunfo,
Rio Grande do Sul. The center&#146;s principal purpose is to evaluate and analyze
technology developed abroad for the petrochemical market and to adapt such
technology to be utilized in the Brazilian market. This center
integrates several laboratories and employs approximately 125 engineers and technicians
specialized in developing products and modern equipment, rendering technical
and support services to its customers and improving the Company&#146;s technological
standards. This center has developed new applications for the development of
linear low density polyethylene and the development of improvements in
polyolefins packaging for the Company&#146;s clients.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of its
investments and the research performed at this center, the Company offers
numerous new products every year and currently has pending over 70 patent
applications. In 2002, the center provided services to approximately 180 clients. These
services consisted of performing specific tests and responding to requests to develop new
products on behalf of the Company&#146;s clients. The
Company inaugurated a new wing in
December 2002 to assist in its continued efforts to develop new
products and applications and to improve its competitiveness.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to developing new products and applications, the center is an
important part of the Company&#146;s strategy to improve its clients&#146; products and
to create new domestic and international business opportunities. The Company
works closely with its customers in order to understand their concerns and to
provide a tailored product. This technical assistance enables the Company to
enhance customer loyalty.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company also maintains partnerships with Brazilian and foreign
universities, research centers and public institutes to assist it in developing
research projects, including among other universities and institutes, the
<I>Universidade de S&#227;o Carlos</I>, <I>Universidade Federal de Campina Grande</I>, <I>Unicamp</I>,
<I>Instituto de Pesquisa Nuclear </I>(Nuclear Research Institute, or IPEN).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The original patents covering the majority of the Company&#146;s petrochemical
production process are in the public domain. The Company was licensed to use
certain technology in connection with the construction of the second ethylene
plant but is not dependent on any external patents or know-how for its
operations. This is also true for the majority of its aromatics plants, with
the exception of the para-xylene expansion project, concluded in 1998, where a
know-how license is in effect for 15&nbsp;years.
</FONT>

<P align="center"><FONT size="2">98</FONT>



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<!-- link2 "ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES" -->
<DIV align="left"><A NAME="006"></A></DIV>
<P align="left"><FONT size="2"><B>ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES</B>
</FONT>

<P align="left"><FONT size="2"><B>Directors and Senior Management</B></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Braskem&#146;s bylaws provide that its Board of Directors is composed of eleven
members and eleven alternate members. During periods of absence or temporary
unavailability of a regular member of Braskem&#146;s Board of Directors, the
corresponding alternate member substitutes for the absent or unavailable
regular member. Braskem&#146;s Board of Directors is a decision-making body
responsible for, among other things, determining policies and guidelines for
Braskem&#146;s business and Braskem&#146;s wholly-owned subsidiaries and controlled
companies. Braskem&#146;s Board of Directors is responsible for supervising
Braskem&#146;s Board of Executive Officers and monitors its implementation of the
policies and guidelines established by the Board of Directors. Under the
Brazilian Corporate Law, Braskem&#146;s Board of Directors is also responsible for
hiring external auditors.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The members of Braskem&#146;s Board of Directors are elected at general
meetings of shareholders for two-year terms and are eligible for reelection.
Under a shareholders&#146; agreement, the Odebrecht Group has the right to nominate
a majority of the Company&#146;s Board of Directors, and the Mariani Group has the
right to nominate at least one member of the Company&#146;s Board of Directors. See
&#147;Item&nbsp;7. Major Shareholders and Related Party Transaction&#151;Shareholders
Agreements&#151;Controlling Shareholders Agreement.&#148; The terms of all current
members expire in 2004. Members of Braskem&#146;s Board of Directors are subject to
removal at any time with or without cause at a general meeting of shareholders.
Braskem&#146;s bylaws do not contain any citizenship or residency requirements. The members
of Braskem&#146;s Board of Directors must be shareholders of Braskem. The President
and the Vice President of Braskem&#146;s Board of Directors are elected at a general
meeting of shareholders from among the members of Braskem&#146;s Board of Directors,
serve for one-year terms, are eligible for reelection and are subject to
removal at any time with or without cause at a general meeting of shareholders.
Braskem&#146;s Board of Directors is presided over by the President and, in his
absence, by the Vice President.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Braskem&#146;s Board of Directors ordinarily meets four times a year and
extraordinarily when a meeting is called by the President, the Vice-President
or any two members of Braskem&#146;s Board of Directors. Decisions of Braskem&#146;s
Board of Directors require a quorum of a majority of the directors and are
taken by majority vote.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth certain information with respect to the
current members of Braskem&#146;s Board of Directors:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Name</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Member Since</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Position Held</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Age</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD nowrap valign="top"><FONT size="2">Pedro Augusto Ribeiro Novis</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Aug. 15, 2001
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">President of the Board
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">56</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD nowrap valign="top"><FONT size="2">Alvaro Fernandes da Cunha Filho</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Nov. 6, 1997
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Vice-President of the Board
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">54</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Jos&#233; de Freitas Mascarenhas</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Aug. 15, 2001
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Board Member
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">61</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Luiz Fernando Cirne Lima</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Aug. 15, 2001
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Board Member
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">70</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Newton Sergio de Souza</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Aug. 15, 2001
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Board Member
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">50</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Alvaro Pereira Novis</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Aug 15, 2001
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Board Member
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">59</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Francisco Teixeira de S&#225;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
May&nbsp;24, 2001
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Board Member
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">54</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Fernando de Castro S&#225;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
April&nbsp;29, 2003
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Board Member
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">36</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Carlos Alberto de Meira Fontes</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Aug. 15, 2001
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Board Member
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">53</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Margareth Feij&#243; Brunnet</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Sept. 27, 2002
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Board Member
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">44</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Cezar dos Santos</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
April&nbsp;29, 2003
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Board Member
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">63</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Summarized below is information regarding the business experience, areas
of expertise, and principal outside business interests of Braskem&#146;s current
directors:</FONT>
<P align="center"><FONT size="2">99</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Pedro Augusto Ribeiro Novis.</u> Mr.&nbsp;Novis was elected to Braskem&#146;s Board of
Directors as a nominee of ODB. He has been a member of the Company&#146;s Board of
Directors since August 2001 and was elected president of the Board in March
2002. He has also been: a member of the Board of Directors of ODB since
October 1997; the chief executive officer of ODB; the chief executive officer
of ODBPAR; and a member of the advisory council of CNO (another one Braskem&#146;s
shareholders). Mr.&nbsp;Novis also worked at: CNO from March 1968 through 1980,
where he was the general officer of the vice president of the business projects
since August 1979; Companhia Brasileira de Projetos e Obras &#151; CBPO, where he
was executive officer from August 1980 through March 1984 and general officer
from April 1984 through March 1985; and vice-president executive officer from
March 1985 through September 1997, when he started working at ODB. He holds a
law degree from the Universidade Federal da Bahia.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Alvaro Fernandes da Cunha Filho.</u> Mr.&nbsp;Cunha Filho was elected to Braskem&#146;s
Board of Directors as a nominee of ODB and has been a member of the Company&#146;s
Board of Directors since 1997. He is currently the vice president of Braskem&#146;s
Board of Directors and of the Board of Directors of Norquisa. Mr.&nbsp;Cunha also
served as: the Secretary of Industry, Commerce and Tourism of the State of
Bahia from 1983 through 1987; executive vice president of Unipar &#150; Uni&#227;o de
Ind&#250;strias Petroqu&#237;micas S.A. from 1993 through 1994; a member of the board of
directors of Unipar &#150; Uni&#227;o de Ind&#250;strias Petroqu&#237;micas S.A. from 1994 through
1996 and president of OPP Qu&#237;mica, Trikem, Odequi, Copec &#150; Complexo
Petroqu&#237;mico de Cama&#231;ari, Cetrel &#150; Central de Tratamento de Efluentes L&#237;quidos
S.A., and Copesul. Mr.&nbsp;Cunha Filho holds a bachelor&#146;s degree in civil
engineering and a master&#146;s degree in economics from the Universidade Federal da
Bahia.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Jos&#233; de Freitas Mascarenhas.</u> Mr.&nbsp;Mascarenhas was elected to Braskem&#146;s
Board of Directors as a nominee of ODB in 2001. He is an executive officer of
ODB and a member of the advisory council of CNO; the president of Fieb &#150;
Federa&#231;&#227;o das Ind&#250;strias do Estado da Bahia and of Cieb &#150; Centro das Ind&#250;strias
do Estado da Bahia since September 1992; and vice president of CNI &#150;
Confedera&#231;&#227;o Nacional das Ind&#250;strias since October 1985 and of ABIQUIM since
May 1993. Mr.&nbsp;Mascarenhas has also served as the president of Veracel Celulose
S.A., EPB &#150; Empresas Petroqu&#237;micas do Brasil S.A. from August 1988 through
March 1998 and was a member of the board of directors of Coelba &#150; Companhia de
Eletricidade do Estado da Bahia from March 1987 was a April 1997. Mr.
Mascarenhas holds a bachelor&#146;s degree of civil engineering from Universidade
Federal da Bahia.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Luiz Fernando Cirne Lima.</u> Mr.&nbsp;Lima was elected to Braskem&#146;s Board of
Directors as a nominee of ODB in 2001. He is currently the superintendent
executive officer of Copesul and a member of the Board of Directors of Banco
Icatu S.A., a Brazilian bank. Mr.&nbsp;Lima has also served as: the Minister of
Agriculture from 1969 through 1973; a member of the board of directors of
Gazeta Mercantil from 1977 through 1993, a member of the executive board of
politic and social orientation of Fiesp &#150; Federa&#231;&#227;o das Ind&#250;strias do Estado de
S&#227;o Paulo; and a member of the board of executive officer of Varig S.A. Mr.
Lima holds a bachelor&#146;s degree of agronomical engineering from the Universidade
Federal do Rio Grande do Sul.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Newton Sergio de Souza.</u> Mr.&nbsp;Souza was elected to Braskem&#146;s Board of
Directors as a nominee of ODB in 2001. He is currently the general counsel and
an executive officer of ODB, an alternate member of the Board of Directors of
Norquisa, an executive officer of ODBPAR, the vice president of the board of
directors of Companhia de Concess&#245;es Rodovi&#225;rias &#150; CCR, an operator of toll
roads, the vice president of the board of directors of Concession&#225;ria da
Rodovia Presidente Dutra S.A., an operator of toll roads, the vice president of
the Board of Directors of Concession&#225;ria do Sistema Anhanguera-Bandeirantes
S.A., an operator of toll roads, the vice president of the Board of Directors
of Concession&#225;ria Ponte Rio-Niter&#243;i S.A., an operator of toll roads, a member
of the Board of Directors of Concession&#225;ria Rodovia dos Lagos S.A., an operator
of toll roads, an executive officer of Odebrecht Servi&#231;os de Infra-Estrutura
S.A., and a member of the Advisory Council of CNO. Mr.&nbsp;Souza has also served
as a visiting lawyer at the law firm Dechert, Price &#038; Rhoads (Philadelphia,
USA), as a senior lawyer at the law firm Pinheiro Neto Advogados from 1976
through 1982, and as senior counsel of Latin America and Caribbean Division of
the World Bank (Washington DC, USA) from 1982 through 1987. Mr.&nbsp;Souza holds a
law degree from Pontif&#237;cia Universidade Cat&#243;lica do Rio de Janeiro and an LL.M.
from the University of Pennsylvania, with a specialization in capital markets.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Alvaro Pereira Novis.</u> Mr.&nbsp;Novis was elected to Braskem&#146;s Board of
Directors as a nominee of ODB in 2001. He is currently the chief financial
officer and executive officer of ODB and an executive officer of ODBPAR. Mr.
Novis has also served as: the national division vice president of
BankBoston in 1966. In 1980, he was elected Managing Director of Banco Iochpe
de Investimentos, where he became president in 1995 upon its association with
Bankers Trust. From 1989 to 1991, Mr.&nbsp;Novis worked in the Banco BHM, in
association with Aralbank. Mr.&nbsp;Novis holds a bachelor&#146;s degree in economics
from the Universidade do Rio de Janeiro and a master&#146;s degree in Public
Administration from Funda&#231;&#227;o Get&#250;lio Vargas.
</font>

<P align="center"><FONT size="2">100</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Francisco Teixeira de S&#225;.</u> Mr.&nbsp;S&#225; was elected to Braskem&#146;s Board of
Directors as a nominee of ODB in 2001. He is the president of the Board of
Directors of Norquisa, the president of the Board of Directors of Copene
Mon&#244;meros Especiais S.A., the president of Pronor, the president of the Board
of Directors of Engepack S.A., an executive officer of CPN Distribuidora de
Combust&#237;veis Ltda., an executive officer of Tegal Terminal de Gases Ltda., an
executive officer of PIN Petroqu&#237;mica S.A. and an executive officer of Latapack
S.A. Mr.&nbsp;S&#225; has also served as: engineering and production manager of Dow
Qu&#237;mica S.A. from 1973 through 1984; as industrial officer of EDN &#150; Estireno do
Nordeste S.A. from 1984 through 1989; and commercial officer and superintendent
officer of Cara&#237;ba Metais S.A. from 1989 through 1997. He holds a bachelor&#146;s
degree in chemical engineering from the Universidade Federal da Bahia.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Fernando de Castro S&#225;.</u> Mr.&nbsp;S&#225; was elected to Braskem&#146;s Board of Directors
as a nominee of Petros on April&nbsp;29, 2003. He is currently the supply legal
manager of Petrobras and a partner of the law office De Castro S&#225; e Pagnano
Advogados Associados. Mr.&nbsp;S&#225; has also served as a trainee in the legal
department of Banco Nacional S.A. and as a lawyer with the law firm of Teixeira
&#038; Advogados Associados. Mr.&nbsp;S&#225; holds a bachelor&#146;s degree in sociology from the
Universidade Federal do Rio de Janeiro and a post graduate degree in business
law from Funda&#231;&#227;o Get&#250;lio Vargas (FGV).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Cezar dos Santos.</u> Mr.&nbsp;Santos was elected to Braskem&#146;s Board of Directors
as a nominee of Previ on April&nbsp;29, 2003. He is a retired employee of Previ and
Banco do Brasil S.A. While an employee of Banco do Brasil S.A. and Previ, Mr.
Santos also served as: a member of the fiscal council of Companhia de
Eletricidade do Estado da Bahia &#150; COELBA from April 1998 through April 2001;
and is president of the fiscal council of Tupi S.A. since April 2001. Mr.
Santos has a degree in economics from Universidade do Estado do Rio de Janeiro,
a law degree from the Universidade Santa &#218;rsula, Rio de Janeiro, and an MBA
degree from Funda&#231;&#227;o Get&#250;lio Vargas (FGV).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Carlos Alberto de Meira Fontes.</u> Mr.&nbsp;Fontes was elected to Braskem&#146;s Board
of Directors as a nominee of Petroquisa in 2001. He is currently the president
of Petroquisa since April 2000, the Petrochemical Executive Manager of
Petrobras, the president of the Advisory Council of the F&#225;brica Carioca de
Catalisadores, a chemical catalyst company, the vice president of the Board of
Directors of Petroqu&#237;mica Uni&#227;o S.A., the vice president of the Board of
Directors of Rio Pol&#237;meros S.A. and a member of the Officers Council of
Associa&#231;&#227;o Brasileira de Ind&#250;strias Qu&#237;micas e Produtos Derivados (Brazilian
Association of Chemical Industry and Derivative Products, or ABIQUIM). Mr.
Fontes has also served as manager of petrochemical projects at Petrobras. Mr.
Fontes holds a bachelor&#146;s degree in chemical engineering from the Instituto
Militar de Engenharia (IME), took courses in engineering given by Petrobras,
holds a postgraduate degree in business management from the Universidade
Federal do Rio de Janeiro and attended a program for advanced management.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Margareth Feij&#243; Brunnet.</u> Mrs.&nbsp;Brunnet was elected to Braskem&#146;s Board of
Directors as a nominee of Petroquisa in 2002. She is the manager of
Petrochemicals Projects of Petrobras, the general manager of Investments in
Petrochemical Centers of Petrobras, an executive officer of Petroquisa, an
executive officer of Downstream Participa&#231;&#245;es S.A., a holding company, and a
member of the Board of Directors of Copesul. Mrs.&nbsp;Brunnet has also served as
petrochemical projects manager from April 2000 through April 2002, as
petrochemical projects coordinator from December 1999 through April 2000, as
chief of the department of hydrorefinement at a Petrobras refinery in 1999 and
chief of the department of special products at a Petrobras refinery from 1996
through 1998. Mrs.&nbsp;Brunnet holds a bachelor&#146;s degree in chemical engineering
from the Universidade Federal do Rio Grande do Sul, took courses in process
engineering from Petrobras and holds a postgraduate degree in management
development.
</FONT>
<P align="center"><FONT size="2">101</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2"><B><I>Board of Executive Officers</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Braskem&#146;s Board of Executive Officers is Braskem&#146;s executive management
body. Braskem&#146;s executive officers are Braskem&#146;s legal representatives and are
responsible for Braskem&#146;s internal organization and day-to-day operations and
the implementation of the general policies and guidelines set forth by the
Board of Directors.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Braskem&#146;s bylaws require that the Board of Executive Officers consist of a
Chief Executive Officer and between three and nine additional members, each
responsible for business areas that Braskem&#146;s Board of Directors assigns to
them. The members of Braskem&#146;s Board of Executive Officers, other than
Braskem&#146;s Chief Executive Officer, have no formal titles (other than the title
of executive officer) but have the informal titles set forth in the table
below.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The members of Braskem&#146;s Board of Executive Officers are elected by
Braskem&#146;s Board of Directors for two-year terms, corresponding to the terms of
the members of Braskem&#146;s Board of Directors, and are eligible for reelection.
The current term of all of Braskem&#146;s executive officers ends in 2004.
Braskem&#146;s Board of Directors may remove any executive officer from office at
any time with or without cause. According to the Brazilian Corporate Law,
executive officers must be residents of Brazil but need not be shareholders of
the Company. Braskem&#146;s Board of Executive Officers holds meetings when called
by Braskem&#146;s Chief Executive Officer.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table lists the current members of Braskem&#146;s Board of
Executive Officers:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Name</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Year of Appointment</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Position Held</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Age</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Jos&#233; Carlos Grubisich Filho</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
2002</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Chief Executive Officer

</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">46</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Paul Elie Altit</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
2002</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Vice President
Executive Officer and

</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chief Financial officer

</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">45</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>


















<TR valign="bottom">
    <TD valign="top"><FONT size="2">Bernardo Afonso de Almeida Gradin</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
2002</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Vice President Executive Officer
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">38</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Luiz de Mendon&#231;a</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
2002</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Vice President Executive Officer<BR>
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">40</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Mauricio Roberto de Carvalho Ferro</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
2002</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Vice President
Executive Officer and <BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General Counsel
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">37</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Roberto Prisco Para&#237;so Ramos</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
2002</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Vice President Executive Officer
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">56</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Rog&#233;rio Affonso de Oliveira</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
2002</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Vice President Executive Officer
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">52</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Summarized below is information regarding the business experience, areas
of expertise and principal outside business interests of Braskem&#146;s current
executive officers:

</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Jos&#233;
Carlos Grubisich Filho.</u> Mr.&nbsp;Grubisich is currently Braskem&#146;s chief
executive officer. He is also currently the chief executive officer of Odequi,
Copene Participa&#231;&#245;es and Trikem and the vice president of the board of
directors of Copesul. He was the chief executive officer of OPP Qu&#237;mica and the
president of the board of directors of OPP Qu&#237;mica. In January
1997, Mr.&nbsp;Grubisich became the chairman and the chief financial officer of Rhodia&nbsp;S.A. (currently known as &#147;Rhodia Brasil Ltda,&#148; a member of
the Rh&#244;ne Poulenc Group) for Brazil and Latin America. From 1999 to 2001, he
served as vice-president of Rhodia Fine Organics worldwide and was member of
the executive committee of the Rh&#244;ne Poulenc Group. Mr.&nbsp;Grubisich holds a
bachelor&#146;s degree in chemical engineering from Escola Superior de Qu&#237;mica
Oswaldo Cruz and an MBA degree from INSEAD &#150; France<I>.</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Bernardo
Afonso de Almeida Gradin.</u> Mr.&nbsp;Gradin is currently one of
Braskem&#146;s vice president executive officers and head of Braskem&#146;s Vinyls Unit.
He is also a member of the Board of Directors of Copene Participa&#231;&#245;es and
Trikem and an executive officer of Odequi and of Trikem. Mr.&nbsp;Gradin was a
member of the board of directors of OPP Qu&#237;mica. Mr.&nbsp;Gradin also served as the
production manager of CNO from July 1986 through May 1990, as contract manager
of Odebrecht of America, from July 1990 through June 1996 and as superintendent
officer of CNO from September 1996 through December 2000. Gradin holds a
bachelor&#146;s degree in civil engineering from the Universidade Federal da Bahia.
</FONT>
<P align="center"><FONT size="2">102</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Luiz de Mendon&#231;a.</u> Mr.&nbsp;Mendon&#231;a is currently one of Braskem&#146;s vice
president Executive Officers and head of Braskem&#146;s Polyolefins Unit. He is
also an executive officer of Copene Participa&#231;&#245;es and Polialden
(Superintendent) and a member of the board of directors of Polialden and was an
executive officer of OPP Qu&#237;mica. Mr.&nbsp;Mendon&#231;a also worked 15&nbsp;years at Rhodia,
where he served as general manager of production, supply and finance and
marketing, an officer of the chemical division (Latin America) and
vice-president of Rhodia U.S.A. Mr.&nbsp;Mendon&#231;a holds a bachelor&#146;s degree in
production engineering from Escola Polit&#233;cnica da Universidade de S&#227;o Paulo
and an MBA degree from INSEAD &#150; France.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Mauricio Roberto de Carvalho Ferro.</u> Mr.&nbsp;Ferro is currently Braskem&#146;s vice
president and general counsel, an executive officer of Odequi, a member of the
Board of Directors of Companhia Industrial Alagoas &#150; Cinal, a utilities
company, an executive officer of Copene Mon&#244;meros Especiais S.A., a member of
the board of directors of Copene Participa&#231;&#245;es, an alternate member of the
Board of Directors of Politeno, a member of the Board of Directors of Polialden
and a member of the Board of Directors of Trikem. Mr.&nbsp;Ferro was also an
executive officer and general counsel of OPP Qu&#237;mica and a member of the Board
of Directors of Nitrocarbono. Mr.&nbsp;Ferro has also served as a lawyer at the law
firm of Carlos Eduardo Paladini Cardoso in 1989 and as a lawyer at the law firm
of Bulh&#245;es Pedreira, Bulh&#245;es Carvalho e Advogados Associados from 1991 until
1995. Ferro holds a law degree from the Pontif&#237;cia Universidade Cat&#243;lica do
Rio de Janeiro and an LL.M. degree from the University of London and from the
London School of Economics.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Paul Elie Altit.</u> Mr.&nbsp;Altit is currently one of Braskem&#146;s vice president
executive officers and Braskem&#146;s chief financial officer, an alternate member
of the Board of Directors of Companhia de Desenvolvimento Rio Verde &#150;
Codeverde, a utilities company, an executive officer of Odequi, a member of the
Board of Directors of Cinal, the vice president of the Board of Directors of
Copene Participa&#231;&#245;es, a member of the Board of Directors of Polialden, the
investor relations officer of Polialden, a member of the Board of Directors of
Trikem and the investor relations officer of Trikem. Mr.&nbsp;Altit was also the
vice president of the Board of Directors of OPP Qu&#237;mica, an executive officer
and chief financial officer of OPP Qu&#237;mica, a member of the Board of Directors
of Nitrocarbono and the investor relations officer of Nitrocarbono. Mr.&nbsp;Altit
has also served as the manager of business development of CNO from 1988 through
1990, controller of CNO from 1991 through 1993 and as the chief financial
officer and investor relations officer of CNO from 1994 through 2002. Mr.
Altit holds a bachelor&#146;s degree in engineering from the Universidade Federal do
Rio de Janeiro and a post-graduate degree in finance from the Pontif&#237;cia
Universidade do Rio de Janeiro.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Roberto Prisco Para&#237;so Ramos.</u> Mr.&nbsp;Ramos is currently one of Braskem&#146;s
vice president executive officers and head of Braskem&#146;s Business Development
Unit. He is also an executive officer and co-chairman of the North Sea
Production Company Ltda. (Scotland), and a member of the board of directors of
Cinal. Mr.&nbsp;Ramos was a member of the board of directors of OPP Qu&#237;mica, the
president of the board of directors of Nitrocarbono and the chief executive
officer of Nitrocarbono. Mr.&nbsp;Ramos has also served as the chief financial
officer of Filippo Fochi SpA (Italy) from September 1992 through April 1995, as
the chief financial officer of Tenenge &#150; T&#233;cnica Nacional de Engenharia (London
and S&#227;o Paulo) from May 1995 through June 1997, as superintendent officer and
chairman of Odebrecht Oil and Gas Ltd. (London) from July 1997 through July
2000, and as superintendent officer and chairman of Odebrecht Oil &#038; Gas Ltda.
from August 2000 through August 2002. Mr.&nbsp;Ramos holds a bachelor&#146;s degree in
mechanical engineering from the Universidade Federal do Rio de Janeiro, a
post-graduate degree in the Program for Management Development from Harvard
Business School and a master&#146;s in finance from the University of Leicester,
England<I>.</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Rog&#233;rio Affonso de Oliveira.</u> Mr.&nbsp;Oliveira is currently one of Braskem&#146;s
vice president executive officers and head of Braskem&#146;s Basic Petrochemicals
Unit. He is also the vice president of the Board of Directors of Cinal, a
member of the Board of Directors of Copene Participa&#231;&#245;es and an alternate
member of the Board of Directors of Polialden. Mr.&nbsp;Olivera was also a member
of the Board of Directors of OPP Qu&#237;mica. Mr.&nbsp;Oliveira has also served as an
executive officer of Ceman S.A. &#150; Central de Manuten&#231;&#227;o de Cama&#231;ari from
January 1989 through April 2002, acting in the commercial and industrial areas.
Mr.&nbsp;Oliveira holds a degree of mechanical engineering from the Universidade
Federal do Rio Grande do Sul and took courses in equipment engineering given by
Petrobras.
</FONT>

<P align="center"><FONT size="2">103</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2"><B><I>Fiscal Council</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Brazilian Corporate Law permits the Company to establish, and allows
shareholders to request the establishment of, a permanent <I>conselho fiscal</I>
(Fiscal Council). Accordingly, Braskem&#146;s bylaws provide for a Fiscal Council
composed of five members and their respective alternate members. The Brazilian
Corporate Law requires that the Fiscal Council be independent of management
and Braskem&#146;s external auditors. The primary responsibility of the Fiscal
Council is to review management&#146;s activities and the financial
statements, and
to report their findings to the shareholders.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The members of Braskem&#146;s Fiscal Council are elected by Braskem&#146;s
shareholders at the annual general shareholders&#146; meeting for one-year terms and
are eligible for reelection. The terms of the members of Braskem&#146;s Fiscal
Council expire at the next ordinary annual general shareholders&#146; meeting.
Under the Brazilian Corporate Law, the Fiscal Council may not contain members
that are: on the Board of Directors or on the Board of Executive Officers;
Braskem&#146;s employees; employees of a controlled company or of a company that is
a member of the controlled group of companies; or spouses or relatives of any
member of Braskem&#146;s management. A person elected to serve on the Fiscal
Council must be a resident of Brazil and either be a university graduate or
have been a company officer or Fiscal Council member of a Brazilian company for
at least three years prior to election to the Fiscal Council.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of preferred shares without voting rights and non-controlling
common shareholders that together hold at least 10% of Braskem&#146;s voting shares
are each entitled to elect one member and his or her respective alternate to
the Fiscal Council.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table lists the current members of Braskem&#146;s Fiscal Council
that were elected by Braskem&#146;s shareholders on April&nbsp;29, 2003:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="57%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>First Year of</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Name</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Appointment</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">S&#233;rgio Pereira da Rocha</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
2001</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">J&#250;lio Diniz Bastos Pinto</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
1999</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Ismael Campos de Abreu</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
2003</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Manoel Mota Fonseca</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
2002</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Walter Murilo Melo de Andrade</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
2002</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2"><B><I>Compensation</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;According to Braskem&#146;s bylaws, Braskem&#146;s shareholders are responsible for
establishing the aggregate compensation the Company pays to the members of
Braskem&#146;s Board of Directors, Braskem&#146;s Executive Officers and Fiscal Council
members. Braskem&#146;s shareholders determine this aggregate compensation at the
general shareholders&#146; meeting each year. Once aggregate compensation is
established, the members of the Board of Directors are responsible for
distributing such aggregate compensation individually to the members of
Braskem&#146;s Board of Directors and Braskem&#146;s Board of Executive Officers in
compliance with Braskem&#146;s bylaws. Braskem&#146;s Board of Directors does not have a
compensation committee.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the year ended December&nbsp;31, 2001, the aggregate compensation paid by
the Company to all members of Braskem&#146;s Board of Directors, members of
Braskem&#146;s Board of Executive Officers and members of the Fiscal Council for
services in all capacities was approximately R$2.85&nbsp;million. For the year
ended December&nbsp;31, 2002, the aggregate compensation paid by the Company to all
members of Braskem&#146;s Board of Directors, members of Braskem&#146;s Board of
Executive Officers and members of Braskem&#146;s Fiscal Council for services in all
capacities was approximately R$2.5&nbsp;million. On April&nbsp;29, 2003, Braskem&#146;s
shareholders (acting in the annual general meeting) established the following
compensation for the year 2003: (1)&nbsp;Board of Directors: an aggregate limit of
R$950,000; (2)&nbsp;Executive Officers: a total amount of R$6.5&nbsp;million; and (3)&nbsp;the
Fiscal Council: 10% of the average
monthly compensation of the Executive Officers to each regular member,
plus travel and lodging expenses (the statutory minimum set forth in the
Brazilian Corporate Law and in Braskem&#146;s bylaws). The members of Braskem&#146;s
Board of Directors participate in the Company&#146;s profit sharing plan.
</FONT>
<P align="center"><FONT size="2">104</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Braskem&#146;s Executive Officers receive the same benefits generally provided
to Braskem&#146;s employees, such as medical (including dental) assistance, private
pension plan and meal vouchers. Like the company&#146;s employees, Braskem&#146;s
Executive Officers also receive the equivalent to an additional month&#146;s salary
paid annually or proportionally to number of months worked in the year (known
as the &#147;thirteenth&#148; (monthly) salary in Brazil), 33.3% of one-month&#146;s salary
for vacation, and contributions of 8% of their salary in a public pension fund
known as the <I>Fundo de Garantia por Tempo de Servi&#231;o </I>(Guarantee Fund for Years
of Service, or FGTS).
</FONT>
<P align="left"><FONT size="2"><B>Employees</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Braskem has invested in a series of courses for the training of
operations, laboratory and maintenance personnel through agreements with
training entities. Education and training activities are a direct result of the
survey of competencies and abilities necessary for employee performance. In the
year 2002, the Braskem&#146;s total investment in education and training amounted to
U.S.$1.2&nbsp;million for 310,000 hours of training, an average of 111 hours per
employee.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Braskem&#146;s career plan is based on abilities. The program was established
with Braskem&#146;s own resources and technology and has become a national
benchmark in human resources practices. In 2002, the career plan permitted
salary increases for 36% of Braskem&#146;s employees.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table sets forth on a pro forma basis the number of
employees of the Company, including the companies which are currently subsidiaries of Braskem, as of the dates
indicated.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>Year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="19"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1999</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1998</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Number of Employees</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
2,817</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">3,204</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">3,160</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">3,260</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">3,250</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Braskem&#146;s employees and their dependents have medical and dental
assistance through a system that uses a network of accredited doctors and
services. Braskem principally pays the costs for these services, with a smaller
amount being paid by the employees. A small monthly fee is also
charged to the
employees to pay for more costly medical services. In 2002, Braskem spent
U.S.$4.1&nbsp;million with this assistance.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Braskem pays part of the monthly payments made to three private pension
funds: <I>Odebrecht Previd&#234;ncia</I>; <I>Funda&#231;&#227;o Petrobras de Seguridade Social </I>and
<I>PREVINOR &#151; Associa&#231;&#227;o de Previd&#234;ncia Privada</I>. The majority of the Company&#146;s employees,
2,201 at present, participate in these funds. The private pension funds pay
supplementary pension and retirement amounts relative to those paid by the
Brazilian government&#146;s official pension system, intending to provide its
members with a comfortable income at the end of their professional activities.
In 2002, Braskem paid approximately U.S.$2.4&nbsp;million into these funds. See
Note 12 to the Consolidated Financial Statements.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Braskem&#146;s program of participation in results is an established practice
and is based on concepts and criteria negotiated with a committee of employees.
In 2002, the program of participation in results paid U.S.$9.6&nbsp;million to 2720
employees. An aggregate amount of U.S.$1.68&nbsp;million of this amount was paid to
the Company&#146;s Executive Officers in 2002. The members of the Company&#146;s Board
of Directors do not participate in the Company&#146;s program of participation in
results.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In Brazil, both employees and employers have the right to organize unions.
Within the confines of a defined geographic area, employees belonging to any
specific &#147;professional category&#148; and employees constituting a specific
&#147;economic category&#148; may each be represented by only one union. Individual
unions generally belong to state-wide union federations, which in turn belong
to nationwide union confederations.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Braskem is a member of the Petrochemicals and Synthetic Resins Industries
Union of the States of Bahia, Alagoas and Rio Grande do Sul, and Braskem&#146;s
employees belong to the Petrochemicals Industries Worker&#146;s Unions in each of
these States.
</FONT>
<P align="center"><FONT size="2">105</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2"><B>Share Ownership of Directors and Officers</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The total number of shares owned by members of Braskem&#146;s Board of
Directors and Executive Officers as of June&nbsp;23, 2003 represented 0.01% of
Braskem&#146;s capital stock.
</FONT>
<!-- link2 "ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS" -->
<DIV align="left"><A NAME="007"></A></DIV>
<P align="left"><FONT size="2"><B>ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS</B>
</FONT>

<P align="left"><FONT size="2"><B>Major Shareholders</B></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has a total authorized capital of 6,100,000,000 shares
composed of common shares and preferred shares, all without par value. As of
May&nbsp;31, 2003, the Company had R$1,847,767,225.23 in outstanding capital and
2,196,000,000 authorized shares of common stock, 3,843,000,000 authorized
shares of class A non-voting preferred stock and 61,000,000 authorized shares
of class B non-voting preferred stock. As of May&nbsp;31, 2003, there were
1,226,091,148 outstanding shares of common stock, 2,160,832,034 outstanding
shares of class A preferred stock and 11,457,740 outstanding shares of class B
preferred stock. Under the Brazilian Corporate Law, the aggregate number of
non-voting shares of the Company may not exceed two-thirds of the total number
of shares.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has registered one class of American Depositary Shares (each,
an &#147;ADS&#148; or a &#147;Preferred Class A ADS&#148;) with the Commission pursuant to the Securities Act, each ADS
evidenced by American Depositary Receipts (each, an &#147;ADR&#148;
or a &#147;Preferred Class A ADR&#148;) representing 50
class A preferred shares. As of June&nbsp;27, 2003, the Company had approximately
35 record holders of class A preferred shares, or ADSs representing class A
preferred shares, in the United States. The Company&#146;s ADRs are issued by
Citibank N.A. pursuant to a deposit agreement.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information concerning the ownership of the
Company&#146;s common shares and preferred shares as of May&nbsp;31, 2003 by each person
who the Company knows to be the owner of more than 5% of any class of its
outstanding capital stock, and by all of the Company&#146;s directors and executive
officers as a group.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="17%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center" valign="top"><FONT size="1"><B>Class B Preferred</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Common Stock</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Class A Preferred Shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center" valign="top"><FONT size="1"><B>Shares(4)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Total(5)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Number of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Number of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1"><B>Number of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Number of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>%</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>%</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1"><B>shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>%</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>%</B></FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">Odebrecht Group (1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
553,764,188</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">45.2</FONT></TD>
    <TD nowrap valign="top"><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">941,352,460</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">43.6</FONT></TD>
    <TD nowrap valign="top"><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&#151;
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&#151;
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">1,495,116,648</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">44.0</FONT></TD>
    <TD nowrap valign="top"><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Mariani Group (2)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
43,634,909</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">3.6</FONT></TD>
    <TD nowrap valign="top"><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">78,401,603</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">3.6</FONT></TD>
    <TD nowrap valign="top"><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&#151;
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&#151;
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">122,036,512</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">3.6</FONT></TD>
    <TD nowrap valign="top"><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">Norquisa</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
377,750,595</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">30.8</FONT></TD>
    <TD nowrap valign="top"><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">35,492,482</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">1.6</FONT></TD>
    <TD nowrap valign="top"><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&#151;
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&#151;
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">413,243,076</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">12.2</FONT></TD>
    <TD nowrap valign="top"><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Petroquisa (3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
99,590,749</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">8.1</FONT></TD>
    <TD nowrap valign="top"><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">283,324,254</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">13.1</FONT></TD>
    <TD nowrap valign="top"><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&#151;
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&#151;
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">382,915,003</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">11.3</FONT></TD>
    <TD nowrap valign="top"><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="bottom"><FONT size="2">All directors and<BR>
executive officers as<BR>
a group (18&nbsp;persons)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">
9</FONT></TD>
    <TD valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">0.0</FONT></TD>
    <TD nowrap valign="bottom"><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">290,029</FONT></TD>
    <TD valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">0.01</FONT></TD>
    <TD nowrap valign="bottom"><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><FONT size="2">&#151;
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><FONT size="2">&#151;
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">290,038</FONT></TD>
    <TD valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">0.01</FONT></TD>
    <TD nowrap valign="bottom"><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Treasury</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
&#151;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&#151;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">53,007,864</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">2.4</FONT></TD>
    <TD nowrap valign="top"><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&#151;
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&#151;
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">53,007,864</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">1.6</FONT></TD>
    <TD nowrap valign="top"><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">Others</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
151,350,698</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">12.3</FONT></TD>
    <TD nowrap valign="top"><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">768,963,342</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">35.6</FONT></TD>
    <TD nowrap valign="top"><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">11,457,740
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">100
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">931,771,781</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">27,4</FONT></TD>
    <TD nowrap valign="top"><FONT size="2">%</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Represents direct ownership of 122,266,186 shares of common stock owned
by ODB, 424,243,853 shares of common stock owned by ODBPAR, 7,254,149
shares of common stock owned by Copene Participa&#231;&#245;es (formerly
Conepar), 937,725,386 shares
of class A preferred stock owned by ODB and 3,627,074 shares of class A
preferred stock owned by Copene Participa&#231;&#245;es. In addition, ODB and
ODBPAR together own 50% of the voting capital stock of Norquisa.
Accordingly, the Odebrecht Group also beneficially owns 50% of the
Company&#146;s shares owned directly by Norquisa. The Odebrecht Group
disclaims ownership of the Company&#146;s shares owned by Norquisa other than
with respect to its proportionate interest in these shares. The Odebrecht
Group also owns convertible debentures issued originally by OPP Produtos.
Approximately 80% of such debentures could be converted into the Company&#146;s
shares at any time, at the Odebrecht Group&#146;s discretion. If such right
had been exercised on December&nbsp;31, 2002, 606,907 new shares of the Company
would have been issued. See Note 9 to the Company&#146;s consolidated
financial statements.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Represents direct ownership of 43,634,909 shares of common stock owned by
Pronor and 78,380,866 shares of class A preferred stock owned by Pronor.
In addition, Pronor owns 16.1% of the voting capital stock of Norquisa.
Accordingly, the Mariani Group (through Pronor) also beneficially owns
16.1% of the Company&#146;s shares owned directly by Norquisa. The Mariani
Group disclaims ownership of the Company&#146;s shares owned by
Norquisa other than with respect to its proportionate interest in these
shares.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(3)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Represents direct ownership of 99,590,749 shares of common stock owned by
Petroquisa and 283,324,254 shares of class A preferred stock owned by
Petroquisa. Under the Petroquisa Memorandum of Understanding, as amended,
ODB granted Petroquisa an option to purchase the number of the Company&#146;s
common shares and preferred shares necessary for Petroquisa to hold a
number of shares equal to the number held by ODB, PQBA and Norquisa,
collectively. Petroquisa can exercise this option in full on a single
occasion on the last day of any month on or prior to April&nbsp;30, 2005 at a
price based on the Company&#146;s enterprise valuation. If Petroquisa
exercises this option, Petroquisa is required to pay the exercise price
with all of the Copesul shares that it holds. If, after Petroquisa
exercises its option, its percentage ownership of the Company&#146;s shares is
less than the aggregate percentage ownership of ODB, PQBA and Norquisa,
collectively, then ODB must sell to Petroquisa a sufficient number of the
Company&#146;s shares so that such percentages are equal. See &#147;Shareholders
Agreements &#151; Petroquisa Memorandum of Understanding.&#148;</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">106</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(4)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">All of the Company&#146;s class B preferred shares were subscribed for by the <I>Fundo de
Investimento do Nordeste </I>&#150; FINOR (the Northeast Investment Fund, or
FINOR) and are subject to restrictions on transfer for four years
from the date of their transfer by FINOR.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(5)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The Company has no option plans or options outstanding. Holders of the
Company&#146;s common shares each are entitled to one vote per common share.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><B><I>Changes in Ownership</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of January&nbsp;1, 2000: Norquisa, owned directly and indirectly, 58.4% of
the Company&#146;s common shares and 22.8% of the Company&#146;s total capital stock;
Petroquisa owned 15.4% of the Company&#146;s common shares and 21.4% of the
Company&#146;s total capital stock; Previ owned 5.8% of the Company&#146;s common shares
and 6.5% of the Company&#146;s total capital stock; Petros owned 5.7% of the
Company&#146;s common shares and 2% of the Company&#146;s total capital stock; and
Odequi, a member of the Odebrecht Group, owned 1.7% of the Company&#146;s common
shares and 0.6% of the Company&#146;s total capital stock.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December 2001, Odequi acquired the common shares of Norquisa held by
Trikem, and Odequi transferred all of its shares of Norquisa and the company to
ODBPAR.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of January&nbsp;1, 2000, the holders of the common shares of Norquisa were
Petronor with 23.7%, Pronor with 16.1%, Trikem with 16%, Politeno with 12.5%,
EDN with 12.5%, Oxiteno with 10.4%, Polipropileno with 8.9% and Conepar with
0.04%.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the Auction, on July&nbsp;25, 2001, Nova Odequi Ltda., a
subsidiary of Odequi, acquired 23.7% of the common shares of Norquisa from
Petronor.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the Related Party Mergers, on August&nbsp;16, 2002, the
Company issued (1)&nbsp;shares representing 43.7% of its voting and total capital
stock to ODB as consideration for the capital stock of OPP Produtos, and (2)
shares representing 3.6% of its voting and total capital stock to Pronor, as
consideration for the capital stock of 52114 Participa&#231;&#245;es. Following the
Related Party Mergers, ODB transferred a portion of the shares that it acquired
to ODBPAR.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of these transactions, as of December&nbsp;31, 2002: the Odebrecht
Group owned 44.6% of the Company&#146;s common shares and 44% of the Company&#146;s total
capital stock; the Mariani Group owned 3.6% of the Company&#146;s total capital
stock; Norquisa owned 30.8% of the Company&#146;s common shares and 12.2% of the
Company&#146;s total capital stock; Petroquisa owned 8.1% of the Company&#146;s common
shares and 11.3% of the Company&#146;s total capital stock; Previ owned 3.1% of the
Company&#146;s common shares and 3.4% of the Company&#146;s total capital stock; and
Petros owned 3.1% of the Company&#146;s common shares and 1.1% of the Company&#146;s
total capital stock.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, as of December&nbsp;31, 2002, the holders of the voting stock of
Norquisa were the Odebrecht Group with 39.7%, Pronor with 16.1%, Politeno with
12.5%, EDN with 12.5%, Oxiteno with 10.4%, Polipropileno with 8.9% and Copene
Participa&#231;&#245;es (formerly Conepar) with 0.04%.
</FONT>
<P align="center"><FONT size="2">107</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2"><B>Shareholders Agreements</B>
</FONT>

<P align="left"><FONT size="2"><B><I>Controlling Shareholders Agreement</I></B></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;27, 2001, Odequi and PQBA entered into a shareholders agreement
with respect to their shares of Norquisa and the Company, which was amended on
July&nbsp;29, 2002 pursuant to the First Amendment to Shareholders Agreement among
Odequi, ODB, ODBPAR and PQBA (as amended, the &#147;Controlling Shareholders
Agreement&#148;).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Controlling Shareholders Agreement provides that:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The Odebrecht Group has the right to nominate a majority of
Norquisa&#146;s board of directors and a majority of the Company&#146;s Board of
Directors;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The Mariani Group has the right to nominate at least one member of
Norquisa&#146;s board of directors and at least one member of the Company&#146;s
Board of Directors;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The Odebrecht Group has the right to nominate all of the members of
Norquisa&#146;s board of executive officers and the Company&#146;s Board of
Executive Officers; <I>provided </I>that, if Norquisa&#146;s board of directors is
eliminated, the Mariani Group will have the right to nominate at least
one member to Norquisa&#146;s board of executive officers;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">ODB, ODBPAR and PQBA will exercise their voting rights with respect
to the Company and Norquisa to implement the organizational
restructuring of the Company; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">ODB, ODBPAR and PQBA will meet prior to each general shareholders
meeting of Norquisa to coordinate their voting with respect to matters
to be submitted to the meeting.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Controlling Shareholders Agreement, ODB and ODBPAR, on the one
hand, and PQBA, on the other hand, granted to the other a right of first
refusal in respect of sales or transfers of shares of Norquisa owned by
either of them. If the Odebrecht Group sells any of its shares of Norquisa,
PQBA has the right to sell a pro rate portion of its shares of Norquisa on the
terms and conditions under which the Odebrecht Group sells its shares. If the
Odebrecht Group sells a sufficient number of its shares of Norquisa to result
in a change of joint control of Norquisa, PQBA has the right to sell all of its
shares of Norquisa on the terms and conditions under which the Odebrecht Group
sells its shares. If the Odebrecht Group sells or transfers direct or indirect
control of the Company to a third party, PQBA has the right to sell all of its
shares of the Company on the same terms offered by the third party acquiring
control of the Company.
</FONT>
<P align="left"><FONT size="2"><B><I>Petroquisa Memorandum of Understanding</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;3, 2001, Odequi and PQBA entered into a Memorandum of
Understanding regarding Shareholders Agreement with Petroquisa (the &#147;Petroquisa
MOU&#148;). The Petroquisa MOU grants (1)&nbsp;veto rights to Petroquisa over certain
actions by the shareholders and the Board of Directors, (2)&nbsp;Petroquisa a right
of first refusal in respect of the Company&#146;s common or preferred shares and (3)
Petroquisa tag-along rights. The Petroquisa MOU has a term of 20&nbsp;years from the
date of the Auction, unless a shareholders&#146; agreement containing the terms set
forth below is entered into prior to that date.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Petroquisa MOU, Petroquisa will have veto rights over the
following matters at any general meeting of the Company&#146;s shareholders:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Any modification of the rights conferred on shares of the Company
by its bylaws if that modification would adversely affect the value of
the Company&#146;s shares;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Any change, increase or reduction of the scope of the Company&#146;s
corporate purpose, except as necessary for the Company to operate as
an integrated petrochemical company;</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">108</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Any increase in the number of members of the Company&#146;s Board of
Directors;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Any decrease in the number of members of the Company&#146;s Board of
Directors to be nominated by Petroquisa below two directors;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Any capital increase by the Company paid in by tendering goods or
rights, unless those goods or rights relate to the Company&#146;s corporate
purpose and a valuation of those goods or rights is performed by a
first tier investment bank or independent auditing firm;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Any merger or, spin-off of the Company into another company or of
another company into the Company that could result in the unjustified
dilution of the percentage ownership of Petroquisa except that the
integration of the second generation companies controlled by the
controlling shareholders is expressly permitted; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Dissolution or liquidation of the Company.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Petroquisa MOU, Petroquisa has veto rights over resolutions of
the Company&#146;s Board of Directors relating to the following matters:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">acquisitions, sales or granting of liens against the Company&#146;s
fixed assets with values in excess of 30% of the Company&#146;s net worth,
if such acquisition, sale or grant of a lien is not related to, or is
outside the scope of, the Company&#146;s corporate purpose;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">transactions involving affiliates of the parties to the Petroquisa
MOU, other than second generation petrochemical producers affiliated
with the parties;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">any resolution that would cause the Company to fail to meet any of
the following financial ratios, with any projections to determine
compliance with this provision to be performed by an internationally
recognized entity:</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>

<TD width="93%"><FONT size="2">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;projected net debt to EBITDA of less than 3.5;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;EBITDA to interest expense greater than 3.0; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;EBITDA to debt service (excluding trade finance) greater than 1.75; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">investments in other companies, unless they are in the same business as the Company.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Petroquisa has the right to sell a <I>pro rata </I>portion of its shares of the
Company in connection with any sale of the Company&#146;s shares by the controlling
shareholder to a third party that involves a change of control.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Petroquisa also has a right of first refusal to increase its participation
to 35% of the Company&#146;s voting capital stock, in case of a transfer of shares
by the controlling shareholder.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Petroquisa MOU was amended on July&nbsp;26, 2002 by ODB and Petroquisa.
Under this amendment, ODB granted Petroquisa an option to purchase the number
of the Company&#146;s common shares and preferred shares necessary for Petroquisa to
hold a number of shares equal to the number held by ODB, PQBA and Norquisa,
collectively. Petroquisa can exercise this option in full on a single
occasion on the last day of any month on or prior to April&nbsp;30, 2005 at a price
based on the Company&#146;s enterprise valuation. If Petroquisa exercises the
option, Petroquisa is required to pay the exercise price with all of the
Copesul shares that it holds. If, after Petroquisa exercises its option, its
percentage ownership of the Company&#146;s shares is less than the aggregate
percentage ownership of ODB, PQBA and Norquisa collectively, then ODB must sell
to Petroquisa a sufficient number of the Company&#146;s shares so that such
percentages are equal.
</FONT>

<P align="center"><FONT size="2">109</FONT>



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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the amendment, the controlling shareholders and Petroquisa agreed
that in the event that Petroquisa exercises the option:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the controlling shareholder (acting jointly) and Petroquisa will
have equal decision-making powers with respect to the Company,
including the right to elect an equal number of members to the
Company&#146;s Board of Directors;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the controlling shareholders and Petroquisa will coordinate their
votes in shareholders&#146; meetings and meetings of the Company&#146;s Board of
Directors and will vote as a block;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Petroquisa would be required to sell all of its investments, other
than passive investments, in companies that compete with the Company
within 18&nbsp;months of the exercise of the option; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the controlling shareholder and Petroquisa will be prohibited from
acquiring additional shares of the Company from third parties unless
otherwise agreed by the non-acquiring parties.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, under this amendment, Odebrecht and Petroquisa each granted
to the other the right to purchase the Company&#146;s common shares held by the
other on the same terms as such shares were offered to a third party.
</FONT>
<P align="left"><FONT size="2"><B><I>Pension Funds Memorandum of Understanding</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;20, 2001, Odequi and PQBA entered into a Memorandum of
Understanding regarding Shareholders Agreement with Petros and Previ (&#147;the
Pension Funds MOU&#148;). The Pension Funds MOU grants veto rights to Petros and
Previ over certain actions by the Company&#146;s shareholders and Board of
Directors. Certain provisions in the Pension Funds MOU have a term of 20
years, unless a shareholders&#146; agreement containing the terms set out below is
entered into prior to that date.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Pension Funds MOU, the parties agreed to adopt the following
basic principles for the Company&#146;s management:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the Board of Directors will be composed of competent professionals;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the dividend policy will have as its objective the distribution of
at least 50% of net income available during the relevant period;
<I>provided </I>that all necessary reserves for the efficient operation and
development of the business are established and maintained; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the Company will adopt a commercial policy that assures the regular
and continuous supply of raw materials and utilities on a competitive
basis and in line with the domestic and international markets.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">Under the Pension Funds MOU, Petros and Previ have veto rights (to be exercised
jointly) over the matters for which Petroquisa would have veto rights at
meetings of the shareholders under the Petroquisa MOU.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Pension Funds MOU, Petros and Previ have veto rights (to be
exercised jointly) over resolutions of the Board of Directors relating to the
following matters:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">acquisitions, sales or
encumbrances of the Company&#146;s fixed assets, or
entering into contracts, with values in excess of 30% of the Company&#146;s
net worth, if such acquisition, sale or grant of a lien is not related
to, or is outside the scope of, the Company&#146;s corporate purpose;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">entering into contracts with related entities, unless a valuation
is performed by an investment bank selected by the controlling
shareholder from a list of five, first-tier banks prepared by
Petroquisa, Petros and Previ; and</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">110</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">any resolution that would cause the Company to fail to meet any of
the following financial ratios, with any projections to determine
compliance with this provision to be performed by an internationally
recognized entity:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="89%"><FONT size="2">projected net debt to EBITDA of less than 3.5;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="89%"><FONT size="2">EBITDA to interest expense greater than 3.0; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="89%"><FONT size="2">EBITDA to debt service (excluding trade finance) greater than 1.75.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The veto rights of Petros and Previ are valid so long as on a combined
basis they own, together with other private pension funds, at least 15% of the
Company&#146;s voting capital. If the percentage of voting capital owned by Petros
and Previ together is diluted below 15% at any time due to the integration of
the second generation companies, those veto rights will remain in effect for
three years after that time, during which Petros and Previ may purchase more of
the Company&#146;s shares in order to maintain their veto rights beyond such
three-year period. Accordingly, although as a result of the Related Party
Mergers the participation of Petros and Previ in the Company&#146;s voting capital
was diluted to 6.1%, their veto rights remain in effect.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Pension Funds MOU contains the following liquidity provisions with
respect to the Company&#146;s shares owned by Petros and Previ:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Petros and Previ are guaranteed a right of first refusal in respect
of sales or transfers of shares owned by either of them or by other
pension funds, as well as the right to elect members of the Board of
Directors and the Fiscal Council;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Under the shareholders&#146; agreement contemplated by the Pension Funds
MOU, Petros and Previ will have the right to sell a <I>pro rata </I>portion of
the Company&#146;s shares owned by each of them in connection with any sale
of the Company&#146;s shares by the Company&#146;s controlling shareholders to a
third party that involves a change of control; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">In order to transfer their veto rights under the Pension Funds MOU,
Petros and Previ must give the controlling shareholder a right of first
refusal to purchase the Company&#146;s shares owned by each of them in the
event of a proposed sale except that the controlling shareholder will
not have a right of first refusal if the Company&#146;s shares are being
sold to another private pension fund or to a company that does not
compete with the controlling shareholder.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><B>Related Party Transactions</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following summarizes the material transactions that the Company has
engaged in with its principal shareholders and their respective affiliates
since January&nbsp;1, 2002.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company maintains trade accounts receivable and current and long-term
payables with certain of its affiliates with which it has commercial
relationships. These balances result mainly from purchases and sales of goods
and services, which are at prices and on terms equivalent to the average terms
and prices of transactions that the Company enters into with third parties.
</FONT>
<P align="left"><FONT size="2"><B><I>The Odebrecht Group</I></B>
</FONT>


<P align="left"><FONT size="2"><I>OPP Qu&#237;mica</I></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;OPP Qu&#237;mica was merged into the Company on March&nbsp;31, 2003. From August
16, 2002 until March&nbsp;31, 2003, OPP Qu&#237;mica was a subsidiary of the Company.
From July&nbsp;25, 2001 to August&nbsp;16, 2002, OPP Qu&#237;mica was an affiliate of the
Company as a result of the Odebrecht Group&#146;s significant
influence over the Company. For a
description of the OPP Produtos Merger, see &#147;Item&nbsp;4. Information on the Company&#151;History and
Development of the Company&#151;The Related Party Mergers.&#148;
</FONT>
<P align="center"><FONT size="2">111</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to the merger of OPP Qu&#237;mica into the Company, the Company sold
ethylene and propylene to OPP Qu&#237;mica under a long-term contract.
</FONT>
<P align="left"><FONT size="2"><I>Trikem</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trikem has been a subsidiary of the Company since August&nbsp;16, 2002. From
July&nbsp;25, 2001 to August&nbsp;16, 2002, Trikem was an affiliate of the Company as a
result of their common control by the Odebrecht Group. Before July&nbsp;25, 2001,
Trikem was an affiliate of the Company as a result of the Odebrecht Group&#146;s
significant influence over the Company.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trikem, as operator of the Vinyls Unit, purchases all its ethylene, its
primary raw material, from the Basic Petrochemicals Unit.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trikem also purchases electric power, steam, water, compressed air and
nitrogen on market terms from the Basic Petrochemicals Unit.
</FONT>
<P align="left"><FONT size="2"><B><I>The Mariani Group</I></B>
</FONT>

<P align="left"><FONT size="2"><I>Nitrocarbono</I></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Nitrocarbono was merged into the Company on March&nbsp;31, 2003. From August
16, 2002 until March&nbsp;31, 2003, Nitrocarbono was a subsidiary of the Company.
Prior to August&nbsp;16, 2002, Nitrocarbono was an affiliate of the Company as a
result of the Mariani Group&#146;s significant indirect shareholding in the Company.
For a description of the 52114 Participa&#231;&#245;es Merger, see &#147;Item&nbsp;4. Information
on the Company&#151;History and Development of the Company&#151;The Related Party
Mergers.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to the merger of Nitrocarbono into the Company, the Company sold
ethylene, propylene, electricity and other utilities to Nitrocarbono under a
long-term contract.
</FONT>
<P align="left"><FONT size="2"><B><I>Petrobras</I></B>
</FONT>

<P align="left"><FONT size="2"><I>Petr&#243;leo Brasileiro S.A.</I></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Petrobras is the controlling shareholder of Petroquisa, which holds 8.1%
of the Company&#146;s voting capital stock and 11.3% of the Company&#146;s total capital
stock. The Company purchases naphtha from Petrobras and sells gasoline and LPG
to Petrobras through its wholly-owned subsidiary Petrobras Distribuidora S.A.
The Company recorded purchases of raw materials and utilities from Petrobras of
U.S.$722.9&nbsp;million during the fiscal year ended December&nbsp;31, 2002.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to August&nbsp;9, 2000 the Company was required under Brazilian law to
purchase all of its naphtha requirements from Petrobras. Beginning on August
9, 2000, the Brazilian government implemented a policy of free naphtha price
negotiation and permitted the Company to purchase naphtha from suppliers other
than Petrobras. On June&nbsp;22, 1978, the Company entered into a 10-year renewable
contract with Petrobras under which the prices paid by the Company to Petrobras
for naphtha are established based on ARA quotations and are linked to
fluctuations in the U.S. dollar/<I>real </I>exchange rate.
</FONT>
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<P align="left"><FONT size="2"><B><I>Norquisa Shareholders and Affiliates</I></B>
</FONT>

<P align="left"><FONT size="2"><I>Polialden Petroquimica S.A.</I></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Polialden has been the Company&#146;s subsidiary since July 2001. Prior to the
Auction, Polialden indirectly owned 23.7% of the Company&#146;s voting capital stock
through Petronor. In connection with the Auction, Polialden sold the
Company&#146;s shares
that it owned to Odequi. The Company sells ethylene, utilities and hydrogen to
Polialden under long-term contracts that are renewable automatically for
five-year periods. In 2002, the Basic Petrochemical Unit sold approximately
10.8% of its total ethylene sales volumes to Polialden.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Polyolefins Unit, which includes the operations of Polialden,
purchases 33% of its ethylene and propylene from Basic Petrochemicals Unit. In
2002, these purchases represented approximately 25% of the total cost of sales
of the Polyolefins Unit. The Polyolefins Unit also purchases electric power,
steam and water on market terms from the Basic Petrochemicals Unit.
</FONT>
<P align="left"><FONT size="2"><I>Politeno Ind&#250;stria e Com&#233;rcio S.A.</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Politeno owns 12.5% of Norquisa, which, in turn, owns 30.8% of the
Company&#146;s voting capital stock. In addition, since September 2001, the Company
has owned 35% of the voting capital stock of Politeno. The Company sells
ethylene, propylene, electricity and other utilities to Politeno under
long-term contracts that are renewable automatically for five-year periods.
</FONT>
<P align="left"><FONT size="2"><I>Polibrasil S.A.- Ind&#250;stria e Com&#233;rcio (formerly known as Polipropileno S.A.)</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Polibrasil S.A. &#150; Ind&#250;stria e Com&#233;rcio is controlled by the Suzano Group.
Polibrasil owns 8.9% of Norquisa, which, in turn, owns 30.8% of the Company&#146;s
voting capital stock. As a result of the Auction and the control exercised by
the Odebrecht Group over Norquisa and the Company, Polibrasil and the Suzano
Group have not had significant influence over the Company since July&nbsp;25, 2001.
The Company sells propylene to Polibrasil under a long-term contract that is
renewable automatically for five-year periods.
</FONT>
<P align="left"><FONT size="2"><I>EDN - Estireno do Nordeste S.A.</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;EDN owns 12.5% of Norquisa, which, in turn, owns 30.8% of the Company
voting capital stock. As a result of the Auction and the control exercised by
the Odebrecht Group over Norquisa and the Company, EDN has not had significant
influence over the Company since July&nbsp;25, 2001. The Company primarily sells
ethylene and benzene to EDN under long-term contracts that are renewable
automatically for five-year periods.
</FONT>
<P align="left"><FONT size="2"><I>Oxiteno do Nordeste S.A.</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Oxiteno owns 10.4% of Norquisa, which, in turn, owns 30.8% of the
Company&#146;s voting capital stock. As a result of the Auction and the control
exercised by the Odebrecht Group over Norquisa and the Company, Oxiteno has not
had significant influence over the Company since July&nbsp;25, 2001. The Company
sells ethane, methane, oxygen, electricity and other utilities to Oxiteno under
long-term contracts that are renewable automatically for five-year periods.
</FONT>
<P align="left"><FONT size="2"><B><I>Investors of the Company</I></B>
</FONT>

<P align="left"><FONT size="2"><I>Copesul</I></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Polyolefins Unit purchases 67% of its ethylene and propylene from
Copesul, in which the Company has a 29.5% interest. The Company has a
long-term supply contract with Copesul that is described in
&#147;Business&#151;Polyolefins Unit&#151;Raw Materials of the Polyolefins Unit&#151;Supply
Contracts and Pricing.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Polyolefins Unit also buys nitrogen on market terms from Copesul.
</FONT>
<P align="center"><FONT size="2">113</FONT>
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<P align="left"><FONT size="2"><I>COPESUL &#150; International Trading Inc.</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;COPESUL &#150; International Trading Inc. is a subsidiary of Copesul. The
Company owns 29.5% of the capital stock of Copesul. At December&nbsp;31, 2002, the
Company had an outstanding loan from COPESUL &#150; International
Trading Inc. of U.S.$72.8&nbsp;million, which
arises from an arrangement between OPP and its subsidiary Lantana
Trading Company, with
interest rates equivalent to market rates. In addition to the U.S. dollar
exchange variation, the average annual financial charges correspond to 7.8% to
8.3%.
</FONT>
<P align="left"><FONT size="2"><I>Ipiranga Petroqu&#237;mica S.A.</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ipiranga Petroqu&#237;mica S.A. is one of the controlling shareholders of
Copesul and has entered into a shareholders&#146; agreement with the Company in
connection with its interests in Copesul.
</FONT>
<P align="left"><FONT size="2"><I>CETREL S.A. - Empresa de Prote&#231;&#227;o Ambiental</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company owns 21.1% of the voting and total capital stock of Cetrel.
The Company purchases treatment services on market terms from Cetrel for the
wastewater and organic residues generated by the Company in the Northeastern
Complex. The Company recorded net purchases from Cetrel of U.S.$4.6&nbsp;million
during the fiscal year ended December&nbsp;31, 2002.
</FONT>
<P align="left"><FONT size="2"><I>Petroflex Ind&#250;stria e Com&#233;rcio S.A.</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company owns 20.1% of the voting and total capital stock of Petroflex.
The Company sells butadiene-1 to Petroflex on market terms under a long-term
contract renewable automatically for further five-year periods. The Company
recorded net sales to Petroflex of U.S.$74.0 million during the fiscal year ended
December&nbsp;31, 2002.
</FONT>
<!-- link2 "ITEM 8. FINANCIAL INFORMATION" -->
<DIV align="left"><A NAME="008"></A></DIV>
<P align="left"><FONT size="2"><B>ITEM 8.</B>&nbsp;&nbsp;&nbsp;&nbsp;<B>FINANCIAL INFORMATION</B>
</FONT>

<P align="left"><FONT size="2"><B>Consolidated Statements and Other Financial Information</B></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reference
is made to Item&nbsp;19 for a list of the financial statements filed
as part of this Registration Statement.
</FONT>
<P align="left"><FONT size="2"><B>Legal Proceedings</B>
</FONT>

<P align="left"><FONT size="2"><B><I>Tax Proceedings</I></B></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As with many other industrial companies in Brazil, the Company is engaged in
several disputes with Brazilian tax authorities. There are currently certain
legal proceedings pending in which the Company or its properties are involved
that, if decided adversely to the Company, could have a material adverse effect
on its results of operations, financial condition or properties. The principal
tax dispute involves a claim for the acknowledgement of federal <I>Imposto sobre
Produtos Industrializados </I>(Federal Excise Tax, or IPI) credits arising
from purchases of ethylene and propylene, taxed at a zero percent rate. The
Brazilian tax authorities argue that Brazilian companies should not be granted
the right to use IPI credits on such raw materials, because there is no legal
provision expressly authorizing such procedure.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IPI is a federal excise tax assessed on a non-cumulative basis. In other
words, the amount of tax paid by suppliers in earlier steps in the production
chain generates a credit to be offset against the IPI due upon the sale of the
final product. According to the tax authorities, the acquisition of raw
materials taxed at a zero percent rate, or that are tax-exempt or non-taxable,
does not generate IPI tax credits. The Company believes that the
interpretation of the federal tax authorities violates the non-cumulative
principle and is not supported by the Brazilian constitution, which does not
impose restrictions on IPI credits derived from transactions involving raw
materials taxed at a zero-percent-rate, or that are tax-exempt or non-taxable.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 1999, OPP Qu&#237;mica and Trikem filed lawsuits in each state in which they
operate seeking IPI tax credits in respect of purchases of ethylene and
propylene from Copene and Copesul. In December 2002, the Federal
Supreme Court, Brazil&#146;s highest court, ruled in favor of OPP Qu&#237;mica (now merged
with and into the Company), granting OPP Qu&#237;mica tax credits in an aggregate
amount of U.S.$284.5&nbsp;million in respect of IPI taxes paid in respect of OPP
Qu&#237;mica&#146;s operations in the State of Rio Grande do Sul from 1992 through 2002.
The Company has two other similar IPI lawsuits pending on behalf of OPP Qu&#237;mica
in the States of Bahia and S&#227;o Paulo. Trikem has three similar IPI lawsuits
pending in the States of Alagoas, Bahia and S&#227;o Paulo. Polialden has one
similar IPI lawsuit pending in the State of Bahia. The Company believes that
it will prevail in each of these lawsuits in light of the recent Federal
Supreme Court decision in favor of OPP Qu&#237;mica, based on its assessment of the
merits of the claims and the advice of Brazilian legal counsel. For
the Company&#146;s
accounting treatment of this matter, see &#147;Item&nbsp;5. Operating and Financial
Review and Prospects&#151;Effects of Taxes on the Company&#146;s Net Income&#151;Other Taxes.&#148;
</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is also involved in disputes for acknowledgement of IPI
premium credits. Decree-Law No.&nbsp;491/69 granted bonuses (premium credits) to
companies that export manufactured products, in order to reimburse these
companies for taxes paid in Brazil prior to the export of the manufactured
products. According to IPI regulations, premium credits could be offset
against other taxes, and could also be transferred to third parties. However,
the Brazilian tax authorities issued a sequence of administrative rules that
reduced, restricted and suspended the use of these premium credits. The
Company believes that these administrative rules are unconstitutional because
rules should not modify or restrict a benefit granted by a Decree-Law. Based
on this legal theory, the Company and its consolidated subsidiaries filed
lawsuits against the Brazilian government in each state in which it operates.
The Company is claiming more than R$551&nbsp;million (equivalent to U.S.$155.9
million using the <I>real</I>/U.S. dollar exchange rate at December&nbsp;31, 2002) in IPI
premium credits. Federal tax authorities issued deficiency notices against the
Company in respect of such credits. The Company has appealed to the taxpayers&#146;
council (an administrative appeal board) and is awaiting judgment. The Federal
Supreme Court recently held one of the rules suspending IPI premium credits
unconstitutional, concluding that the Brazilian exporter in that case could
offset IPI premium credits against other taxes without limitation. In light of
this decision, the Company, based on the opinion of its Brazilian counsel,
believes that it will prevail in these suits.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trikem and OPP also filed suits for the acknowledgement of IPI credits
arising from the acquisition of fixed assets and materials not used in
production. According to IPI regulations, the acquisition of fixed assets and
materials not used in production does not generate IPI credits. Nevertheless,
the Brazilian constitution imposes no restrictions on the grant or use of IPI
credits arising from such acquisitions. Therefore, the Company believes that
it has the right to receive IPI credits related to these transactions. The
federal tax authorities have issued deficiency notices with respect to the
amounts already reimbursed to the Company. The Company is discussing the matter
both in administrative and judicial courts.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Another important tax dispute involves the Company&#146;s challenge to the
constitutionality of a federal contribution tax on profits, the
<I>Contribui&#231;&#227;o
Social sobre o Lucro L&#237;quido </I>(Social Contribution on Net Profits, or CSLL).
The Company&#146;s predecessor, Copene, prevailed on this claim in 1992 when,
pursuant to the decision of the Federal Court, approximately R$42.2&nbsp;million
(equivalent to U.S.$11.9&nbsp;million using the <I>real</I>/U.S. dollar exchange rate at
December&nbsp;31, 2002) in court deposits were released to the Company. However,
based on an intervening decision by the Federal Supreme Court in an unrelated
proceeding holding that the collection of CSLL is constitutional, the National
Treasury filed a so-called &#147;rescission action&#148; (<I>a&#231;&#227;o rescis&#243;ria</I>) in November
1993 seeking relief from the 1992 court decision, which had held that the
collection of the CSLL was unconstitutional. Although this rescission action is
still pending in the Superior Court of Justice, the federal tax authorities
issued deficiency notices and commenced tax foreclosure proceedings in respect
of CSLL taxes that they alleged were overdue. The Company&#146;s Brazilian legal
counsel has advised it that it is not required to pay any new CSLL assessments
until the rescission action has been finally resolved. Based on the opinion of
its Brazilian counsel, the Company believes that it is unlikely that it will be
required to make the related social contribution tax payments, and therefore, it
has not made any provision in its consolidated financial statements for these
contingencies.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has also filed suits seeking reimbursement or refund of a
portion of PIS paid from August&nbsp;1, 1991 through January 1995. During this
period, the Company paid PIS in accordance with the rules of Decree-Law No.
2445/88 and Decree-Law No.&nbsp;2249/88. Subsequent to the enactment of these laws,
the Federal Supreme Court held these laws unconstitutional, concluding that PIS
should have been charged in accordance with Supplementary Law 7/70, which
established a more favorable methodology for the calculation of PIS. Based on
existing jurisprudence, the Company believes that it will prevail in these
suits.
</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of February 1999, Law No.&nbsp;9,718/98 increased the calculation of the tax
base for contributions in respect of COFINS and PIS from 2% to 3%. The Company
believes that these increases in the tax base and the tax rate are
unconstitutional and have filed suit against the Brazilian government seeking
as relief the right to pay PIS and COFINS at rates prevailing prior to the
enactment of Law No.&nbsp;9,718/98.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;According to Article&nbsp;138 of the National Tax Code, the federal government
may not impose fines and penalties on taxpayers that voluntarily confess their
tax infractions and pay the corresponding outstanding taxes plus interest.
However, Brazilian tax authorities hold that such confessions do not relieve
the taxpayer from late payment fines. In order to collect late payment fines
with respect to IPI debts confessed and paid by OPP Qu&#237;mica, the Brazilian tax
authorities issued deficiency notes against OPP Qu&#237;mica, demanding the payment
of approximately R$28.7&nbsp;million (equivalent to U.S.$8.1&nbsp;million using the
<I>real</I>/U.S. dollar exchange rate at December&nbsp;31, 2002) in late payment fines.
OPP Qu&#237;mica filed an appeal with the taxpayers&#146; council (an administrative
appeal board), and is awaiting a decision. The Company believes that it may
prevail in its appeal and that the late payment fines may be withdrawn.
Trikem has also filed a judicial action to overturn the imposition of fines on
overdue taxes payable in installments. The Company believes that Trikem may
prevail in its suit and that the late payment fines may be withdrawn.
</FONT>

<P align="left"><FONT size="2"><B><I>Shareholders&#146; Rights Proceedings</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain owners of the Company&#146;s class B preferred shares have filed suits
against the Company requesting voting and other rights conferred upon owners of
the Company&#146;s class A preferred shares, including in respect of the
distribution of dividends. The Company lost one of these proceedings in the
first instance, but has filed a rescission action seeking to overturn this
decision and has obtained a stay on the enforcement of this decision until the
rescission action has been resolved. These class B shareholders are also
seeking indemnification for damages that they allege that they have sustained.
The damages portion of the proceeding that the Company lost is still pending.
The other minority shareholder suits against the Company remain pending.
</FONT>
<P align="left"><FONT size="2"><B><I>Labor Proceedings</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company and other companies in the Northeastern Complex enter into
annual collective bargaining agreements with the petrochemical workers&#146; union.
The collective bargaining agreement in force between September 1989 and August
1990 required employers to pay workers cost of living adjustments equal to
84.3% of the <I>&#205;ndice de Pre&#231;os ao Consumidor </I>(a consumer price index, or IPC)
per month and prohibited the substitution of the IPC by any index with lower
values than the IPC.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March 1990, the Brazilian government introduced an economic plan known
as the &#147;Collor Plan,&#148; named after the then-President of Brazil. The Collor
Plan provided that cost of living adjustments in wages could be based on other
indices but not on the IPC specifically. Based on judicial precedent, the
Company interpreted the Collor Plan as prohibiting wage increases based on the
IPC, which interpretation was contrary to the terms of the collective
bargaining agreement. To determine which interpretation was legally correct,
the petrochemical employers&#146; union filed a lawsuit against the petrochemical
workers&#146; union, seeking a declaration that the cost of living adjustment
indices provided in the Collor Plan preempted the conflicting provisions in the
collective bargaining agreement. The Regional Labor Court ruled in favor of
the workers&#146; union, which decision was later modified in part on appeal by the
Superior Labor Court. In 1998, the employers&#146; union filed an extraordinary
appeal to the Federal Supreme Court.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This decision was later reconsidered by the Federal Supreme Court, which
reversed a prior decision and held that a private collective bargaining
agreement cannot preempt federal law, especially a law that related to
Brazilian public policy. In 2003, the workers&#146;s union requested
reconsideration of this decision. At the time of the filing of this
Annual Report, the judgment was suspended, considering that two of five judges had
already decided in favor of the Company. The decision of the Federal Supreme
Court in this matter is not final and does not address damages. The Federal
Supreme Court may overturn its determination, in which case, this could
adversely effect the Company, as any judgment will most likely also impact the
wages paid by the Company from April 1990 to the present.
</FONT>
<P align="center"><FONT size="2">116</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, the Company and its subsidiaries, Trikem S.A., Ceman and
Polialden Petroqu&#237;mica S.A. are involved in 785 labor suits that involve claims
totaling approximately R$45.0&nbsp;million (equivalent to U.S.$15.2&nbsp;million using
the <I>real</I>/U.S. dollar exchange rate at June&nbsp;1, 2003) as of June&nbsp;1, 2003.
Copesul, Alclor Qu&#237;mica de Alagoas Ltda., Cinal, Coponer Florestal Ltda.,
Petroflex, ESAE and Politeno are involved in 448 labor suits that involve
claims totaling approximately R$18.5&nbsp;million (equivalent to U.S.$6.2&nbsp;million
using the <I>real</I>/U.S. dollar exchange rate at June 1, 2003) as of June&nbsp;1, 2003.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Braskem has established a provision for labor contingencies in
the amount of R$7.64&nbsp;million as of June&nbsp;1, 2003 (equivalent
to U.S. $2.2&nbsp;million using the <I>real</I>/U.S. dollar exchange
rate at June 1, 2003).
</FONT>

<P align="left"><FONT size="2"><B><I>Social Security Proceedings</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is involved in several administrative and judicial proceedings
regarding social security disputes, which in May 2003 totaled R$62.3&nbsp;million
(equivalent to U.S.$21.0&nbsp;million using the <I>real</I>/U.S. dollar exchange rate at
May&nbsp;31, 2003). The Company deposited approximately R$17.6&nbsp;million (equivalent
to U.S.$5.9&nbsp;million using the <I>real</I>/U.S. dollar exchange rate at May&nbsp;31, 2003)
of this amount with the court. The Company has not established a provision in
respect of these proceedings in its balance sheet, and the <I>Instituto Nacional
de Seguro Social </I>(the National Social Security Institute, or INSS) does not
allow the payment of social security debts in installments.
</FONT>
<P align="left"><FONT size="2"><B><I>Exemption of Income Tax</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Copene was exempt from income tax in respect of sales of basic
petrochemical products and Utilities until the year ended December&nbsp;31, 2001.
This tax exemption was instituted as part of a policy to benefit industrial and
other economic activities conducted in the Northeast of Brazil in an effort to
develop that region.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on Provisional Measure &#150; MP number 2199-14/2001, the Company filed
with the Northeast Development Agency (SUDENE)&nbsp;a request for a 75% income tax
rate reduction as from January&nbsp;1, 2002 in respect of income from sales of basic
petrochemicals and Utilities. The request was rejected, but the Company
obtained a Declaration from the National Integration Ministry authorizing a
reduction of 37.5% for the calendar years of 2002 and 2003 (an effective tax
rate of 15.62%), 25% from 2004 to 2008 (an effective tax rate of 18.75%) and
12.5% from 2009 to 2013 (an effective tax rate of 21.87%). This declaration is applicable to the
Company&#146;s DMT sales as well.
</FONT>

<P align="center"><FONT size="2">117</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2"><B>Dividends And Dividend Policy</B>
</FONT>

<P align="left"><FONT size="2"><B><I>Dividends</I></B></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the dividends paid to holders of Braskem&#146;s
Common Shares and Preferred Shares since 1998 in U.S. dollars translated from
<I>reais </I>at the Commercial Rate in effect as of the date of payment.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="23"><FONT size="1"><B>Nominal Brazilian Currency per 1,000</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>U.S.$ equivalent per 1,000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="23"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>First</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Preferred</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Preferred</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Preferred</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Preferred</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Payment</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Common</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Class A</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Class B</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Common</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Class A</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Class B</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Year</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Date</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Shares</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1998</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">February 10, 1998</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.097301</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.097301</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.345170</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">May 7, 1998</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.082176</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.082176</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.082176</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">August 5, 1998</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.168023</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.168023</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.168023</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">November 5, 1998</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.651827</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.651827</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.651827</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1999</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">February 10, 1999</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.381734</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.381734</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.381734</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">May 12, 1999</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.259781</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.259781</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.259781</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">August 17, 1999</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.526036</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.526036</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.526036</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" nowrap><FONT size="2">November 18, 1999</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.391395</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.391395</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.391395</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2000</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">February 22, 2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.649369</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.649369</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.834502</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">May 23, 2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.278740</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.278740</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.278740</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">August 22, 2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.466674</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.466674</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.466674</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">November 21, 2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.005236</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.005236</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.753927</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2001</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">February 20, 2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.572995</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.572995</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" nowrap align="left"><FONT size="2">May 20, 2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.013000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.013000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.013000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">August 20, 2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.544000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.544000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.544000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">November 20, 2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.674000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.674000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.674000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2002</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">February 25, 2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.938000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.93800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">May 20 2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">R$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.195748</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.195748</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Braskem did not pay dividends for these classes of shares on these dates.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><B><I>Reserves and Distributions</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The discussion below summarizes the main provisions of the Brazilian
Corporate Law regarding the establishment of reserves by corporations and rules
with respect to the distribution of dividends, including provisions regarding
interest attributed to shareholders&#146; equity.
</FONT>
<P align="left"><FONT size="2"><I>Calculation of Distributable Amount</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At each annual shareholders&#146; meeting, the Board of Directors is required
to recommend how to allocate the Company&#146;s net profits for the preceding fiscal
year. Such allocation is subject to approval by the Company&#146;s shareholders.
The Brazilian Corporate Law defines &#147;net profits&#148; for any fiscal year as net
income after income taxes and social contribution taxes for such fiscal year,
net of any accumulated losses from prior fiscal years and any amounts allocated
to employees&#146; and management&#146;s participation in the Company&#146;s net profits in
such fiscal year. In accordance with the Brazilian Corporate Law, an amount,
known as the distributable amount, equal to half of the Company&#146;s net profits,
as further reduced by amounts allocated to a legal reserve or a contingency
reserve, and increased by any reversals of reserves constituted in prior
years, will be available for dividend distributions or payment of interest on
shareholders&#146; equity in any particular year. The Company may also establish
discretionary reserves, contingency reserves, reserves for investment projects,
an unrealized income reserve and tax incentive investment reserves, as
discussed below.
</FONT>
<P align="center"><FONT size="2">118</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Brazilian Corporate Law provides that all discretionary allocations of
net profits, including any discretionary reserves, a contingency reserve, an
unrealized income reserve and a reserve for investment projects, are subject to
approval by the shareholders voting at the annual shareholders&#146; meeting and may
be transferred to shareholders&#146; equity or used for the payment of distributions
in subsequent years. The tax incentive investment reserve and the legal
reserve are also subject to approval by the shareholders voting at the annual
shareholders&#146; meeting and may be transferred to capital or used to absorb
losses but are not available for the payment of distributions in subsequent
years.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s calculation of net profits and allocations to reserves for
any fiscal year are determined on the basis of financial statements prepared in
accordance with the Brazilian Corporate Law. The Company&#146;s consolidated
financial statements included herein have been prepared in accordance with U.S.
GAAP, and although the Company&#146;s allocations to reserves and distributions will
be reflected in these financial statements, investors will not be able to
calculate such allocations or mandatory distributable amounts from these
consolidated financial statements.
</FONT>
<P align="left"><FONT size="2"><I>Reserve Accounts</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Legal Reserve Account.</u> Under the Brazilian Corporate Law and the
Company&#146;s bylaws, the Company is required to maintain a legal reserve to which
the Company must allocate 5% of its net profits for each fiscal year until the
aggregate amount of the reserve equals 20% of the Company&#146;s paid-in capital.
However, the Company is not required to make any allocations to the Company&#146;s
legal reserve in a fiscal year in which the legal reserve, when added to the
Company&#146;s other established capital reserves, exceeds 30% of the Company&#146;s
total capital.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Discretionary Reserve Accounts.</u> Under the Brazilian Corporate Law, the
Company is permitted to provide for the allocation of part of the Company&#146;s net
profits to discretionary reserve accounts that may be established in accordance
with the Company&#146;s bylaws. While the Company&#146;s bylaws do not currently provide
for any discretionary reserves, the Company&#146;s shareholders may amend the
Company&#146;s bylaws in order to establish one or more discretionary reserves. The
allocation of the Company&#146;s net profit to discretionary reserve accounts may
not be made if it serves to prevent the distribution of the mandatory
distribution.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Contingency Reserve Account.</u> Under the Brazilian Corporate Law, a
percentage of the Company&#146;s net profits may be allocated to a contingency
reserve for anticipated losses that are deemed probable in future years. Any
amount so allocated in a prior year either must be reversed in the fiscal year
in which the loss had been anticipated if the loss does not occur as projected
or charged off in the event that the anticipated loss occurs.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Reserves for Investment Projects.</u> Under the Brazilian Corporate Law, a
portion of the Company&#146;s net profits may be allocated to a reserve for
investment projects based on a capital expenditure budget previously presented
by the Company&#146;s management and approved by the Company&#146;s shareholders. Under
Brazilian Corporate Law, if a project relating to this approved capital
expenditure budget has a term exceeding one year, the budget relating to the
project must be re-submitted to the annual shareholders&#146; meeting each fiscal
year until the relevant investment has been completed. After completion of a
relevant capital investment project, the Company may retain the reserve
allocated for such project until the shareholders vote to transfer all or a
portion of such reserve to capital or to retained earnings. The allocation of
the Company&#146;s net profits to investment project reserve accounts may not be
made if it serves to prevent the distribution of the mandatory distribution.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Unrealized Income Reserve Account.</u> Under Brazilian Corporate Law, as of
March&nbsp;1, 2002 the amount by which the distributable amount exceeds the
&#147;realized&#148; net profits for any particular year may be allocated to an
unrealized income reserve account. The Brazilian Corporate Law defines
&#147;realized&#148; net profits as the amount by which the Company&#146;s net profits exceed
the sum of (1)&nbsp;the Company&#146;s net positive results, if any, from the equity
method of accounting for earnings and losses of the Company&#146;s subsidiaries and
certain of its affiliates and (2)&nbsp;the profits, gains, or returns obtained from
transactions taking place after the end of a fiscal year.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The unrealized income reserve account must be used for the payment of the
mandatory distribution.
</FONT>
<P align="center"><FONT size="2">119</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Tax Incentive Investment Reserves.</u> Under Brazilian tax laws, a portion of
net profits also may be allocated to a general &#147;tax incentive investment
reserve&#148; in amounts corresponding to reductions in the Company&#146;s income tax
generated by credits for particular government approved investments. The
reserve is available only in connection with the acquisition of capital stock
of companies undertaking specific government approved projects. See &#147;Dividend
Preference of Preferred Shares.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Mandatory Distributions.</u> The bylaws of a Brazilian corporation may
specify a minimum percentage of the distributable amount that must be
distributed to shareholders as dividends or interest on shareholders&#146;s equity,
also known as the mandatory distributable amount. Under the Company&#146;s bylaws,
the mandatory distributable amount is 25% of the distributable amount, after
any allocations to any legal reserve, contingency reserve, reserve for
investment projects, unrealized income reserve or tax incentive investment
reserve. See &#147;&#151;Calculation of Distributable Amount.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to the mandatory distributable amount, the Board of Directors
may recommend that the shareholders approve the payment of additional
distributions from other funds legally available for distribution.
Distributions made to holders of the Company&#146;s preferred shares are computed in
determining whether the Company has paid the mandatory distribution. Any
payment of interim distributions is netted against the amount of the mandatory
distribution for that fiscal year.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;While the Brazilian Corporate Law requires the mandatory distribution to
be paid in every fiscal year, the Brazilian Corporate Law permits companies to
suspend the mandatory distribution if the Board of Directors report to the
annual shareholders&#146; meeting that the distribution would be incompatible with
the Company&#146;s financial condition. Any suspension of the mandatory
distribution must be approved by the Fiscal Council. In addition, management
of companies with publicly traded securities, including the Company, also must
submit a report setting out the reasons for the suspension to the CVM. Net
profits not distributed by virtue of a suspension are allocated to a special
reserve and, if not absorbed by subsequent losses, are required to be
distributed as soon as the financial condition of the company permits such
payments. The Company&#146;s dividend distribution policy included the distribution
of periodic dividends, based on quarterly balance sheets approved by the Board
of Directors. However, since the first quarter of 2002, the Board of Directors
has recommended that payment of the mandatory distribution be suspended in
light of the Company&#146;s results of operations.
</FONT>
<P align="left"><FONT size="2"><B><I>Payment of Dividends and Interest on Shareholders&#146; Equity</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The mandatory distribution may be made in the form of dividends or
interest attributable to shareholders&#146; equity, which is equivalent to a
dividend but may be deducted by the Company in calculating its income tax
provisions.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Dividends.</u> The Company is required by the Brazilian Corporate Law and by
the Company&#146;s bylaws to hold an annual shareholders&#146; meeting by no later than
April&nbsp;30 of each year at which, among other decisions, the shareholders may
vote to declare an annual dividend. The payment of annual dividends is based
on the audited financial statements prepared for the immediately preceding
fiscal year.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any holder of record of shares at the time that a dividend is declared is
entitled to receive dividends. Under the Brazilian Corporate Law, dividends
are generally required to be paid within 60&nbsp;days following the date on which
the dividend is declared, unless the shareholders&#146; resolution establishes
another date of payment, which, in any case, must occur prior to the end of the
fiscal year in which the dividend is declared.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A shareholder has a three-year prescription period from the date of the
dividend payment to claim dividends or interest payments with respect to its
shares, after which the aggregate amount of any unclaimed dividends legally
reverts to the Company. The Company is not required to adjust the amount of
the dividend payment for any inflation that occurs during the period from the
date of declaration to the payment date.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors may declare interim dividends based on the accrued
profits recorded or the realized profits in the Company&#146;s annual or semi-annual
financial statements approved by the Company&#146;s shareholders. In addition, the
Company may pay dividends from the net income based on the Company&#146;s unaudited
quarterly financial statements. These quarterly interim dividends may not exceed
the amounts accounted for in the Company&#146;s capital reserve accounts. Any
payment of interim dividends may be set off against the amount of mandatory
distributions relating to the net profit earned in the year in which the
interim dividends were paid.
</FONT>
<P align="center"><FONT size="2">120</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Interest on Shareholders&#146; Equity.</u> Since January&nbsp;1, 1996, Brazilian
companies have been permitted to pay limited distributions to holders of equity
securities and treat such payments as a deductible expense for calculation of
Brazilian income tax and since 1998, for calculation of social contribution
tax. In accordance with Law No.&nbsp;9,249 dated December&nbsp;26, 1995, as amended, the
Company&#146;s bylaws permit the distribution of interest on shareholders&#146; equity as
an alternative form of payment of distributions to shareholders. The interest
rate applied to these distributions generally cannot exceed the Brazilian
long-term interest rate, or TJLP, for the applicable period. The amount of
interest paid that can be deducted for tax purposes cannot exceed the greater
of:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">50% of net income (after the deduction of the provision of social
contribution tax and before the deduction of the corporate income tax
provision) before taking into account any such distribution for the
period in respect of which the payment is made; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">50% of the sum of retained earnings and profit reserves.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For accounting purposes, although the interest charge must be included as
a financial expense in the income statement to be tax-deductible, the interest
charge is reversed before calculating net income in the income statement and is
deducted from shareholders&#146; equity like a dividend.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any payment of interest on shareholders&#146; equity to holders of ADSs or
common shares, whether or not they are Brazilian residents, is subject to
Brazilian withholding tax at the rate of 15%, provided that a 25% withholding
tax rate applies if the person receiving this interest is a resident of a tax
haven jurisdiction (<I>i.e.</I>, a country that does not impose income tax or that
imposes it at a maximum rate lower than 20%). See &#147;&#151;Brazilian Tax
Considerations.&#148; Under the Company&#146;s bylaws, the amount distributed to
shareholders as interest on shareholders&#146; equity, net of any withholding tax,
may be included as part of the mandatory distribution.
</FONT>
<P align="left"><FONT size="2"><B><I>Dividend Preference of Preferred Shares</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the Company&#146;s bylaws, holders of preferred shares are entitled
to a minimum annual non-cumulative preferential dividend equal to 6% of their
<I>pro rata </I>share of the Company&#146;s paid-in capital prior to dividends payable to
holders of common shares. To the extent that the Company declares a dividend
in an amount that exceeds the preferential dividend due to holders of
preferred shares, and after holders of common shares have received
distributions equivalent, on a per share basis, to the preferential dividend
payable to preferred shares, holders of common shares and of class A preferred
shares are entitled to receive the same additional dividend amount per share.
After holders of class B preferred shares have received distributions
equivalent, on a per share basis, to the preferential dividend payable to such
shares, holders of class B preferred shares shall not be entitled to receive
additional dividend amounts, in compliance with Law
No.&nbsp;10,303/2001 and Decree-Law n&#186;
1,376/74, which regulates the creation of investment funds and fiscal incentive
programs in the Northeast of Brazil.
</FONT>
<P align="left"><FONT size="2"><B>Significant Changes</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other than as otherwise disclosed in this annual report, no significant
change has occurred since the date of the Consolidated Financial
Statements included in this annual report.
</FONT>
<!-- link2 "ITEM 9. THE OFFER AND LISTING" -->
<DIV align="left"><A NAME="009"></A></DIV>
<P align="left"><FONT size="2"><B>ITEM 9.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>THE OFFER AND LISTING</B>
</FONT>

<P align="left"><FONT size="2"><B>Markets for the Company&#146;s Equity Securities</B></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The principal trading market for Braskem&#146;s Common Shares and Preferred
Class&nbsp;A and B Shares is the BOVESPA. Braskem&#146;s Common Shares and the Preferred
Class&nbsp;A Shares began trading on the BOVESPA on November&nbsp;11, 1980 and the
Preferred Class&nbsp;B Shares on August&nbsp;19, 1983.
</FONT>
<P align="center"><FONT size="2">121</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At December&nbsp;31, 2002, there were an aggregate of 2,160,764,336 Preferred
Class&nbsp;A Shares (including 54,620,037 treasury shares owned or held by or for
the account of the Company), 11,457,740 Preferred Class&nbsp;B Shares and
1,226,091,148 Common Shares issued and outstanding and Braskem had
approximately 5,000 shareholders. As of December&nbsp;31, 2002, the number of U.S.
resident holders of Braskem&#146;s Preferred Class&nbsp;A Shares, Preferred Class&nbsp;B
Shares and Common Shares was approximately 33, 0 and 2, respectively. As of
December&nbsp;31, 2002, there were 10,608,395 Common Shares, 208,095,399 Preferred
Class&nbsp;A Shares, and 0 Preferred Class&nbsp;B Shares held by foreign investors.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Braskem has registered one class of American Depositary Shares (&#147;ADSs&#148;) on
Form&nbsp;F-6 pursuant to the Securities Act. One ADS evidenced by American
Depositary Receipts (&#147;ADRs&#148;) represents 50 Preferred Class&nbsp;A Shares without par
value.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The ADSs of Copene, the Company&#146;s predecessor, were traded in the U.S. as
Level I ADRs, under the symbol &#147;CPEPY&#148; beginning in January 1993. On December
21, 1998, Copene&#146;s ADRs began trading on the New York Stock Exchange (&#147;NYSE&#148;),
with Citibank N.A. as depositary bank. On October&nbsp;8, 2002, following the
change to its present name, Braskem was invited by the NYSE to be present at
the so-called &#147;Opening Bell Ceremony&#148; at the start of the Company&#146;s ADRs Level
II trading in New York under the new ticker symbol &#147;BAK.&#148; On December&nbsp;31,
2002, there were 2,161,346 Preferred Class&nbsp;A ADRs outstanding, representing
108,067,300 Preferred Class&nbsp;A Shares or approximately 5% of Braskem&#146;s
outstanding Preferred Class&nbsp;A Shares.
</FONT>
<P align="left"><FONT size="2"><B>Price History of the Company&#146;s Stock</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The tables below set forth the high and low closing sales prices for the
Preferred Class&nbsp;A Shares on the BOVESPA and the equivalent high and low closing
sales prices for the Preferred Class&nbsp;A ADRs in U.S. dollars for the periods
indicated.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="65%">
<TR valign="bottom">
    <TD width="9%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>

    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="15"><FONT size="1"><B>Annual High and Low Market Prices</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="15"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>U.S. dollars per 50</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>U.S. dollars per Preferred</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Preferred Class A Shares<SUP>(1)</SUP></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Class A ADRs</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>High</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Low</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>High</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Low</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1998</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$17.72</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$3.65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$16.53</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$4.98</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1999</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.68</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2000</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22.88</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2001</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.87</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17.88</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2002</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.76</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.66</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.75</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="65%">
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="15"><FONT size="1"><B>Quarterly High and Low Market Prices</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="15"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>U.S. dollars per 50</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>U.S. dollars per Preferred</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Preferred Class A Shares<SUP>(1)</SUP></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Class A ADRs</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>High</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Low</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>High</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Low</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>2000</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">First Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$19.97</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$14.26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$20.13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$14.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Second Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Third Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19.34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22.88</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18.88</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fourth Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20.43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.59</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20.38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.63</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>2001</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">First Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.01</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17.88</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.05</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Second Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.96</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Third Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.90</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.87</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2">122</FONT>



<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="15"><FONT size="1"><B>Quarterly High and Low Market Prices</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="15"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>U.S. dollars per 50</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>U.S. dollars per Preferred</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Preferred Class A Shares<SUP>(1)</SUP></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Class A ADRs</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>High</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Low</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>High</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Low</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fourth Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$9.99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$6.05</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$10.02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$6.14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>2002</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">First Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.76</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.75</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.05</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Second Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.96</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.72</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.77</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.09</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Third Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.09</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.98</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fourth Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.66</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>2003</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">First Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.76</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="15"><FONT size="1"><B>Monthly High and Low Market Prices</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="15"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>U.S. dollars per 50</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>U.S. dollars per Preferred</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Preferred Class A Shares<SUP>(1)</SUP></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Class A ADRs</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>High</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Low</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>High</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Low</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">December 2002</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$3.47</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$2.63</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$3.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$2.57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">January 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.76</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.64</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">February 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">March 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.47</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">April 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.94</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.71</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">May 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.61</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" noshade width="18%" align="left">

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(1)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">U.S. dollar amounts are translated from Brazilian <I>reais </I>at the Commercial
Market Rates in effect on the date of the corresponding Brazilian currency
quotation for Preferred Class&nbsp;A Shares. Such U.S. dollar amounts may
reflect exchange rate fluctuations and may not correspond to changes in
nominal <I>reais </I>prices over time.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;31, 2002, the closing sales price of the (1)&nbsp;the Preferred
Class&nbsp;A Shares on the BOVESPA was U.S.$3.11 per 50 shares and (2)&nbsp;the Preferred
Class&nbsp;A ADRs on the NYSE was U.S.$3.30 per Preferred
Class&nbsp;A ADR. See &#147;Item&nbsp;3. Key
Information &#150; Selected Financial Data &#150; Exchange Rates&#148; for additional
information on the applicable exchange rates during the periods indicated
above.
</FONT>
<P align="left"><FONT size="2"><B>Trading on the Brazilian Stock Exchanges</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Braskem&#146;s shares are trade on the BOVESPA, which is the most significant
stock exchange in Brazil. On January&nbsp;27, 2000, the BOVESPA and the Rio de
Janeiro Stock Exchange announced an agreement that led to the unification of
the Brazilian securities market under the management of the BOVESPA.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trading on each Brazilian stock exchange is limited to member brokerage
firms and a limited number of authorized non-members. The BOVESPA has one open
outcry trading session each day, from 10:00&nbsp;a.m. to 5:00 p.m. Trading is also
conducted during this time on an automated system called <I>Sistema de Negocia&#231;&#227;o
Assistida por Computador</I>, or CATS. The CVM and each of the Brazilian stock
exchanges have discretionary authority to suspend trading in shares of a
particular issuer under certain circumstances. Off-exchange trading may be
effected in certain circumstances, although such trading is very limited.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Settlement of transactions is effected three business days after the trade
date without any adjustment for inflation. Payment for shares is made through
the facilities of the BOVESPA&#146;s clearinghouse, <I>Companhia Brasileira de
Liquida&#231;&#227;o e Cust&#243;dia </I>(&#147;CLBC&#148;). The seller is ordinarily required to deliver
the shares to the exchange on the second business day following the trade date.
</FONT>
<P align="center"><FONT size="2">123</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to better control volatility, the BOVESPA adopted a &#147;circuit
breaker&#148; system pursuant to which trading sessions may be suspended for a
period of 30 minutes or one hour whenever the BOVESPA share index falls more
than 10% or 15%, respectively, in relation to the index registered in the
previous trading session.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The BOVESPA is less liquid than the New York Stock Exchange or of many
other of the world&#146;s major stock exchanges. As of December&nbsp;31, 2002, according
to information provided by BOVESPA, the aggregate market capitalization of the
407 companies listed on the BOVESPA was equivalent to approximately U.S.$124.04
billion, and the 10 largest companies listed on BOVESPA represented
approximately 46% of the total market capitalization of all listed companies.
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 small groups
of controlling persons, by governmental entities or by one principal
stockholder. As of December&nbsp;31, 2002, approximately 21.6% of the market
capitalization of all listed companies on the BOVESPA was controlled, directly
or indirectly, by the Brazilian government. At December&nbsp;31, 2002, Braskem&#146;s
preferred class A shares posted a closing price of R$11.00 per 50 shares, 46% less than the
closing price for December&nbsp;31, 2001. During 2002, Braskem&#146;s securities were
traded on all the days that the BOVESPA was open. The closing price for
Braskem&#146;s Level II ADRs was 72% less in 2002, ending the year at U.S.$3.30.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trading on Brazilian stock exchanges by a holder not deemed to be
domiciled in Brazil for Brazilian tax and regulatory purposes (a &#147;non-Brazilian
holder&#148;) is subject to certain limitations under Brazilian foreign investment
legislation. With limited exceptions, non-Brazilian holders may only trade on
the BOVESPA in accordance with the requirements of Resolution No.&nbsp;2,689 of
January&nbsp;26, 2000 of the <I>Conselho Monet&#225;rio Nacional </I>(the &#147;National Monetary
Council&#148;). Resolution No.&nbsp;2,689 requires that securities held by non-Brazilian
holders be maintained in the custody of, or in deposit accounts with, financial
institutions duly authorized by the Central Bank and the CVM. In addition,
Resolution No.&nbsp;2,689 requires non-Brazilian holders to restrict their
securities trading to transactions on the BOVESPA or qualifed over-the-counter
markets. With limited exceptions, non-Brazilian holders may not transfer the
ownership of investments made under Resolution No.&nbsp;2,689 to other non-Brazilian
holders through a private transaction. See &#147;Item&nbsp;10. Additional Information &#150; Exchange
Controls.&#148;
</FONT>
<P align="left"><FONT size="2"><B>Regulation of Brazilian Securities Markets</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Brazilian securities markets are regulated by the CVM, which has
authority over stock exchanges and the securities markets generally, and by the
Central Bank, which has, among other powers, licensing authority over brokerage
firms and regulates foreign investment and foreign exchange transactions. The
Brazilian securities market is governed by Law No.&nbsp;6,385 dated December&nbsp;7,
1976, as amended (&#147;the Brazilian Securities Law&#148;) and the
Brazilian Corporate
Law.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
the Brazilian Corporate Law, a company is either public, a
&#147;<I>companhia aberta,</I>&#148; such as Braskem, or private, a &#147;<I>companhia fechada.</I>&#148; All
public companies are registered with the CVM and are subject to periodic
reporting requirements. A company registered with the CVM may have its
securities traded on the Brazilian stock exchanges or in the Brazilian
over-the-counter market (the &#147;Brazilian OTC Market&#148;). The shares of a listed
company, including Braskem, also may be traded privately subject to certain
limitations.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Brazilian OTC Market consists of direct trades between persons in
which a financial institution registered with the CVM serves as intermediary.
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 must
receive notice of all trades carried out in the Brazilian OTC Market by the
respective intermediaries.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trading of a company&#146;s securities on the Brazilian stock exchanges may be
suspended at the request of a company prior to its making a material
announcement if the company requests and obtains the same suspension for
trading on any international stock exchange. Trading may also be suspended by a
Brazilian stock exchange or the CVM, among other reasons, based on or due to a
belief that a company has provided inadequate information regarding a material
event or has provided inadequate responses to the inquiries by the CVM or the
relevant stock exchange.
</FONT>
<P align="center"><FONT size="2">124</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Brazilian Securities Law provides for, among other things, disclosure
requirements, restrictions on insider trading and other forms of price
manipulation and protections for minority shareholders. However, the
Brazilian securities markets are not as highly regulated and supervised as the
United States securities markets or markets in certain other jurisdictions.
</FONT>
<!-- link2 "ITEM 10. ADDITIONAL INFORMATION" -->
<DIV align="left"><A NAME="010"></A></DIV>
<P align="left"><FONT size="2"><B>ITEM 10. ADDITIONAL INFORMATION</B>
</FONT>
<P align="left"><FONT size="2"><B>Description of the Company&#146;s Bylaws</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Set forth below is a summary of certain significant provisions of the
Company&#146;s bylaws and of the Brazilian Corporate Law. In Brazil, the company&#146;s
bylaws (<I>Estatuto Social</I>) is the principal governing document of a corporation.
This description does not purport to be complete and is qualified in its
entirety by reference to the Brazilian Corporate Law and the Company&#146;s bylaws.
An English translation of the Company&#146;s bylaws has been filed herewith.
Information on the trading market for the Company&#146;s preferred shares is set
forth under &#147;Item&nbsp;9. The Offer
and Listing&#151;Principal Market and Trading Market Price Information&#148; and
information on ownership of the Company&#146;s shares is set forth under &#147;Item&nbsp;7.
Major Shareholders and Related Party Transactions&#151;Major Shareholders.&#148;
</FONT>
<P align="left"><FONT size="2"><B><I>General</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s registered name is Braskem S.A., and the Company&#146;s
registered office is located in the Municipality of Camacari, State of Bahia,
Brazil. The Company&#146;s registration number with the Brazilian Commercial
Registry is 42.150.391/0001-70. The Company is duly registered with the CVM
under No.&nbsp;4820. The Company&#146;s principal place of business is in the City of
S&#227;o Paulo, Brazil.
</FONT>
<P align="left"><FONT size="2"><B><I>Company Objects and Purposes</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Article&nbsp;2 of the Company&#146;s bylaws establishes the Company&#146;s corporate purposes to include:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the manufacture, trading, import and export of chemical and petrochemical products;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">production of utilities for use by component companies of the
Northeastern Complex, including the supply of steam, water, compressed
air, industrial gases, electricity, as well as the provision of various
services to these companies;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the holdings of equity stakes (quotas or shares) in other
companies; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the manufacture, distribution, sale, import and export of gasoline,
diesel oil, liquified petroleum gas and other oil derivatives.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><B><I>Board of Directors</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with the Brazilian Corporate Law, any matters subject to the
approval of the Board of Directors can be approved by a simple majority of
votes of the members present at a duly convened meeting, unless the Company&#146;s
bylaws otherwise specify. Pursuant to the Company&#146;s bylaws, the Board of
Directors may only deliberate if a majority of its members are present at a
duly convened meeting. Any resolutions of the Board of Directors may be
approved by the affirmative vote of a majority of the members present at the
meeting.
</FONT>
<P align="left"><FONT size="2"><B><I>Election of Directors; Fiduciary Duties</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with the provisions of the Controlling Shareholders
Agreement, the majority of the members of the Board of Directors are elected by
the Odebrecht Group. All members of the Board of Directors owe fiduciary
duties towards the Company and all of its shareholders. In addition, any
director appointed by a shareholder pursuant to a shareholders agreement is
also bound by the terms of such agreement. See &#147;Item&nbsp;7. Major Shareholders
and Related Party Transactions&#151;Shareholders Agreements.&#148;
</FONT>
<P align="center"><FONT size="2">125</FONT>

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<P align="left"><FONT size="2"><B><I>Qualification of Directors</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Brazilian Corporate Law requires members of a company&#146;s board of
directors to be the shareholders of the company, but there is no minimum share
ownership or residency requirement for qualification as a director. The
Company&#146;s bylaws do not require the members of the Board of Directors to be
resident in Brazil. Brazilian Corporate Law requires the Company&#146;s executive
officers to reside in Brazil.
</FONT>
<P align="left"><FONT size="2"><B><I>Conflicts of Interest</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Brazilian Corporate Law, if a director or an executive officer
has a conflict of interest with the Company in connection with any proposed
transaction, the director or executive officer may not vote in any decision
of the Board of Directors or of the Board of Executive Officers, as the
case may be, regarding such transaction and must disclose the nature and extent
of his conflicting interest for inclusion in the minutes of the meeting.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any transaction in which a director or executive officer may have an
interest, including any borrowings, can only be approved on reasonable or fair
terms and conditions that are no more favorable than the terms and conditions
prevailing in the market or offered by third parties. If any such transaction
does not meet this requirement, then the Brazilian Corporate Law provides that
the transaction may be nullified and the interested director or executive
officer must return to the Company any benefits or other advantages that he
obtained from, or as result of, such transaction. In accordance with the
Brazilian Corporate Law and upon the request of a shareholder that owns 5% or
more of the Company&#146;s total capital stock, directors and executive officers
must reveal to the shareholders at an ordinary meeting of the shareholders
certain transactions and circumstances that may give rise to a conflict of
interest.
</FONT>
<P align="left"><FONT size="2"><B><I>Compensation</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Company&#146;s bylaws, the Company&#146;s common shareholders approve the
aggregate compensation payable to directors and executive officers. Subject to
this approval, the Board of Directors establishes the compensation of its
members and of the executive officers. See &#147;Item&nbsp;6. Directors and Senior
Management &#150; Compensation.&#148;
</FONT>
<P align="left"><FONT size="2"><B><I>Mandatory Retirement</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Neither the Brazilian Corporate Law nor the Company&#146;s bylaws establish any
mandatory retirement age for directors or executive officers.
</FONT>
<P align="left"><FONT size="2"><B><I>Capital Stock</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Brazilian Corporate Law, the number of issued non-voting shares
or shares with limited voting rights, such as the Company&#146;s issued preferred
shares, may not exceed 50% of the total number of issued shares. Prior to the
Brazilian Corporate Law taking effect, the limit of the number of issued
non-voting shares was 66.6% of the total number of issued shares. Companies
seeking to register with the CVM for the first time are required to observe the
new percentage limitation. Companies with an existing CVM registration may
mantain the proportion between common shares and preferred shares existing as
of March&nbsp;1, 2002 or they may elect one of the following two options, which will
not result in appraisal rights for minority shareholders:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">issue additional common shares up to the amount necessary to meet the required proportion; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">repurchase preferred shares from the shareholders.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">126</FONT>


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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each common share entitles its holder to one vote at annual and
extraordinary shareholders&#146; meetings. Holders of common shares are not
entitled to any preference in respect of the Company&#146;s dividends or other
distributions or otherwise in case of the Company&#146;s liquidation.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s preferred class A shares and preferred class B shares are
non-voting, except under limited circumstances, and have priority over the
Company&#146;s common shares in the case of the Company&#146;s liquidation. See &#147;&#151;Voting
Rights&#148; for more information regarding the voting rights of the Company&#146;s
preferred shares, &#147;&#151;Reserves and Distributions&#151;Dividend Preference of Preferred
Shares&#148; for more information regarding the distribution preferences of the
Company&#146;s preferred shares, and &#147;&#151;Liquidation&#148; for more information regarding
the liquidation preferences of the Company&#146;s preferred shares.
</FONT>
<P align="left"><FONT size="2"><B><I>Shareholders&#146; Meetings</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s shareholders have the power to determine any matters related
to changes in the Company&#146;s corporate purposes and to pass any resolutions they
deem necessary to protect and enhance the development of the Company.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the Brazilian Corporate Law, shareholders have the power,
among other powers, to vote at shareholders&#146; meetings to:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">amend the Company&#146;s bylaws;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">elect or dismiss members of the Board of Directors and members of
the Fiscal Council at any time, subject to the right of the Company&#146;s
preferred shareholders to elect or dismiss one member of the Board of
Directors and of the Fiscal Council;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">accept or reject financial statements approved by the Board of
Directors, including the allocation of net profits and the
distributable amount for payment of the mandatory distribution and
allocations to the various reserve accounts;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">approve any capital increase in excess of the amount of the authorized capital;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">approve any capital reduction;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">accept or reject the valuation of assets contributed by a
shareholder in consideration for issuance of capital stock;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">suspend the rights of any shareholder in default of obligations
established by law or by the Company&#146;s bylaws;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">authorize the issuance of convertible debentures;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">approve the: reorganization of the Company&#146;s legal form; or the
merger, consolidation or split-off of the Company; authorize the
dissolution and liquidation of the Company and the election and
dismissal of liquidators appointed in connection therewith and examine
their accounts;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">participate in a centralized group of companies;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">approve the disposition of the control of any of the Company&#146;s subsidiaries;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">approve the disposition of any convertible debentures issued by the
Company&#146;s subsidiaries and held by the Company;</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">127</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">waive the right to subscribe to shares or convertible debentures
issued by the Company&#146;s subsidiaries or affiliates;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">approve the aggregate compensation payable to the Company&#146;s
directors and executive officers;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">approve the cancellation of the Company&#146;s registration as a
publicly-traded company and in such cases, to select an experienced
company to prepare the appraisal of the economic value of the Company&#146;s
shares; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">authorize management to declare the Company insolvent and to
request a <I>concordata </I>(a procedure involving protection of the Company
from its creditors similar in nature to a reorganization under the U.S.
Bankruptcy Code).</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company convenes its shareholders&#146; meetings, including the annual
shareholders&#146; meeting, by publishing a notice in the <I>Di&#225;rio Oficial do Estado
da Bahia </I>and in at least two additional newspapers designated by the
shareholders with general circulation in Bahia, where the Company maintains its
registered office. The notice must be published no fewer than three times,
beginning at least 15 calendar days prior to the scheduled meeting date. The
notice must contain the meeting&#146;s agenda and, in the case of a proposed
amendment to the bylaws, an indication of the subject matter of the proposed
amendment. For ADS holders, the Company is required to provide notice to the
Depositary for distribution to ADS holders at least 30 calendar days prior to a
shareholders&#146; meeting.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Annual shareholders&#146; meetings must be held by April&nbsp;30 of each year. The
Board of Directors may convene a shareholders&#146; meetings. In addition, under
the Brazilian Corporate Law, shareholders&#146; meetings may also be convened by the
Company&#146;s shareholders as follows:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">by any shareholder if, under certain circumstances set forth in the
Brazilian Corporate Law, the directors do not convene a shareholders&#146;
meeting within 60&nbsp;days;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">by the shareholders of not less than 5% of the Company&#146;s total
capital stock if, after a period of eight days, the directors fail to
call a shareholders&#146; meeting that has been requested by such
shareholders; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">by the shareholders of not less than 5% of either the Company&#146;s
total voting capital stock or the Company&#146;s total non-voting capital
stock, if after a period of eight days, the directors fail to call a
shareholders&#146; meeting for the purpose of appointing a Fiscal Council that has
been requested by such shareholders.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each shareholders&#146; meeting is presided over by a President and Secretary
elected by the shareholders present at the meeting. An extraordinary
shareholders&#146; meeting may be held whenever the interests of the Company so
require. A shareholder may be represented at a shareholders&#146; meeting by an
attorney-in-fact appointed by the shareholders not more than one year before
the meeting. The attorney-in-fact must be a shareholder, an officer of the
Company, a lawyer or a financial institution, and the power of attorney
appointing the attorney-in-fact must comply with certain formalities set forth
by Brazilian law.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order for a valid action to be taken at a shareholders&#146; meeting,
shareholders representing at least one quarter of the Company&#146;s issued and
outstanding common shares must be present. However, shareholders representing
at least two-thirds of the Company&#146;s issued and outstanding common shares must
be present at a shareholders&#146; meeting to amend the Company&#146;s bylaws. If a
quorum is not present, the Board of Directors may call a second meeting by
publishing a notice as described above at least five calendar days prior to the
scheduled meeting. The quorum requirements do not apply to the second meeting,
subject to the voting requirements for certain matters described below. A
shareholder without a right to vote may attend a shareholders&#146; meeting and take
part in the discussion of matters submitted for consideration.
</FONT>
<P align="left"><FONT size="2"><B><I>Voting Rights</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the Brazilian Corporate Law and the Company&#146;s bylaws, each of
the Company&#146;s common shares carries the right to vote at a shareholders&#146;
meeting. Preferred shares generally do not confer voting rights,
except as described below. The Company may not restrain or deny any voting rights
without the consent of the majority of the shares affected. Whenever the
shares of any class of capital stock are entitled to vote, each share is
entitled to one vote.

</FONT>
<P align="center"><FONT size="2">128</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as otherwise provided by law, resolutions of a shareholders&#146;
meeting are passed by a simple majority vote of the holders of the common stock
of the Company present or represented at the meeting, without taking
abstentions into account. Under the Brazilian Corporate Law, the approval of
shareholders representing at least a majority of the issued and outstanding
voting shares is required for the types of action described below, as well as,
in the case of the first and second bullet points, a majority of issued and
outstanding shares of the affected class:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">creating a new class of preferred shares or disproportionately
increasing an existing class of preferred shares relative to the other
classes of preferred shares, other than to the extent permitted by the
bylaws, which
permit the Company to modify the proportion between the various classes
of the Company&#146;s preferred shares;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">changing a priority, preference, right, privilege or condition of
redemption or amortization of any class of preferred shares or creating
a new class of preferred shares that has a priority, preference, right,
condition or redemption or amortization superior to an existing class
of preferred shares;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">reducing the mandatory distribution;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">changing the corporate purpose;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">merging the Company with another company, or consolidating or
splitting the Company, subject to the conditions set forth in the
Brazilian Corporate Law;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">transferring all of the shares of the Company to another company,
known as <I>incorpora&#231;&#227;o de a&#231;&#245;es</I>;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">participating in a centralized group of companies as defined under
the Brazilian Corporate Law and subject to the conditions set forth
therein; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">dissolving or liquidating the Company or canceling any ongoing
liquidation of the Company.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Decisions on the Company&#146;s transformation into another form of company
require the unanimous approval of the Company&#146;s shareholders, including the
preferred shareholders.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Brazilian Corporate Law requires that the President of any shareholders&#146;
meeting shall disregard any vote taken that violates the provisions of any
shareholders&#146; agreement if that shareholders&#146; agreement has been duly filed
with the Company.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Brazilian Corporate Law, neither the Company&#146;s bylaws nor
actions taken at a shareholders&#146; meeting may deprive a shareholder of certain
specific rights, including:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the right to participate in the distribution of profits;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the right to participate equally and ratably in any remaining
residual assets in the event of liquidation of the Company;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the right to supervise the management of the corporate business as
specified in the Brazilian Corporate Law;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the right to preemptive rights in the event of an issuance of
shares, debentures convertible into shares or subscription bonuses
(other than with respect to a public offering of such securities, as
may be set out in the bylaws); and</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">129</FONT>

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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the right to withdraw from the Company under the circunstances
specified in the Brazilian Corporate Law.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><I>Voting Rights of Minority Shareholders</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Brazilian Corporate Law, shareholders that are not controlling
shareholders, but that together hold either
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">preferred shares representing at least 10% of the total share capital of the Company, or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">common shares representing at least 15% of the voting capital of the Company,</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">may separately appoint one member and an alternate to the Board of Directors at
the shareholders&#146; meeting. If no group of common or preferred shareholders
meets the thresholds described above, shareholders holding preferred shares or
common shares representing at least 10% of the total share capital of the
Company are entitled to combine their holdings to appoint one member and an
alternate to the Board of Directors. The shareholders seeking to exercise
these minority rights must prove that they have held their shares for not less
than three months preceding the shareholders&#146; meeting at which the Director
will be appointed. Until 2005, the director or directors appointed by the
preferred shareholders as a group, or collectively with the common
shareholders, are chosen from a list of three names prepared by the controlling
shareholder. Any directors appointed by the non-controlling shareholders have
the right to veto the selection of the Company&#146;s independent auditors.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with the Brazilian Corporate Law, preferred shareholders
together with common shareholders (excluding the controlling shareholders) are
entitled to a representative on the Fiscal Council, and one of the members of
the Fiscal Council and his alternate may be appointed and/or dismissed by
holders of common stock, other than the controlling shareholders, if such
holders collectively own not less than 10% of the common shares.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholders holding shares representing not less than 10% of the shares
entitled to vote at the shareholders&#146; meeting, or such smaller percentage
applicable according to a sliding scale determined by the CVM and based on the
total capital of the company, have the right to request that a cumulative
voting procedure be adopted. Under such procedure, each voting share shall
have as many votes as there are positions of directors to be filled, and each
shareholder may cast all of its votes for a single candidate or distribute them
among various candidates. If the cumulative voting procedure is adopted, the
controlling shareholders always retain the right to elect at least the same
numbers of members as the other shareholders plus one, independently of the
total number of directors. This procedure must be requested by the
shareholders at least 48 hours prior to the shareholders&#146; meeting.
</FONT>
<P align="left"><FONT size="2"><I>Voting Rights of the Preferred Shares</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of preferred shares are not entitled to vote on any matter except
with respect to the election of directors by holders of at least 10% of the
Company&#146;s preferred stock and in the limited circumstances provided below.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Brazilian Corporate Law, preferred shareholders together with
common shareholders (excluding the controlling shareholders) will be entitled
to a representative on the Fiscal Council. Under the Company&#146;s bylaws one of
the members of the Fiscal Council and his or her alternate may be appointed
and/or dismissed by a majority vote of the holders of preferred shares.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Brazilian Corporate Law and the Company&#146;s bylaws provide that
non-voting or restricted-voting shares, such as the Company&#146;s preferred shares,
acquire unrestricted voting rights beginning when a company has failed for
three consecutive fiscal years (or for any shorter period set forth in the
company&#146;s by laws) to pay any fixed or minimum dividend to which such shares
are entitled. This voting right shall continue until payment in full has been
made. The Company&#146;s bylaws do not set forth a shorter period. Preferred
shareholders also obtain the right to vote if the Company enters into a
liquidation process.
</FONT>
<P align="center"><FONT size="2">130</FONT>
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<P align="left"><FONT size="2"><B><I>Liquidation</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company shall be liquidated pursuant to the terms of Brazilian law. In the
event of an extrajudicial liquidation of the Company, a shareholders&#146; meeting
shall determine the manner of liquidation and appoint the liquidator and the
Fiscal Council that will function during the liquidation period.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon liquidation, the Company&#146;s preferred shares have a preference over
the Company&#146;s common shares. In the event of a liquidation, the assets
available for distribution to the Company&#146;s shareholders would be distributed
first to the preferred shareholders in an amount equal to their <I>pro rata </I>share
of the legal capital of the company, prior to making any distributions to the
Company&#146;s common shareholders. If the assets to be so distributed are
insufficient to fully compensate the Company&#146;s preferred shareholders, the
preferred shareholders would each receive a <I>pro rata </I>amount (based on their <I>pro
rata </I>share of the legal capital of the Company excluding the common shares in
such calculation) of any available assets.
</FONT>
<P align="left"><FONT size="2"><B><I>Conversion Rights</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;According to the Company&#146;s bylaws, the Company&#146;s preferred shares are not
convertible into common shares. However, the holders of class B preferred
shares are permitted by the Company&#146;s bylaws to convert such shares into class
A preferred shares. The ratio of any such conversion is two class B preferred
shares for each class A preferred share.
</FONT>
<P align="left"><FONT size="2"><B><I>Preemptive Rights</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the Brazilian Corporate Law, each of the Company&#146;s
shareholders has a general preemptive right to subscribe for shares or
securities convertible into shares in any capital increase, in proportion to
the number of shares held by such shareholder. However, pursuant to the
Company&#146;s bylaws, the holders of shares subscribed with using funds originating
from fiscal incentives provided under Law No.&nbsp;6,404/76 do not have preemptive
rights. In the event of a capital increase that would maintain or increase the
proportion of capital represented by the preferred shares, holders of preferred
shares would have preemptive rights to subscribe to newly issued preferred
shares only. In the event of a capital increase that would reduce the
proportion of capital represented by the preferred shares, holders of preferred
shares would have preemptive rights to subscribe to any new preferred shares in
proportion to the number of shares that they hold, and to common shares only to
the extent necessary to prevent dilution of their interests in the Company&#146;s
total capital.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Company&#146;s bylaws, except when issuing voting shares or
securities convertible into voting shares, the Board of Directors or the
shareholders&#146;, as the case may be, may decide not to extend preemptive rights
to the Company&#146;s shareholders with respect to any issuance of shares,
debentures convertible into shares or warrants made in connection with a public
exchange made to acquire control of another company or in connection with a
public offering.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The preemptive rights may be exercised for a period of at least 30&nbsp;days
following the publication of notice of the issuance of securities convertible
into shares, and the right may be transferred. Under the Brazilian Corporate
Law, the Board of Directors may reduce the 30&nbsp;day period for the exercise of
preemptive rights with respect to any issuance of shares, debentures
convertible into shares or warrants in connection with a public exchange made
to acquire control of another company or in connection with a public offering.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event of a capital increase that would maintain or increase the
proportion of capital represented by preferred shares, holders of ADSs will
have, except under the circumstances described above, preemptive rights to
subscribe to newly issued preferred shares. In the event of a capital increase
which would reduce the proportion of capital represented by preferred shares,
holders of ADSs will have preemptive rights to subscribe for preferred shares,
in proportion to their shareholdings, and for common shares to the extent
necessary to prevent dilution of their overall interest in the Company.
However, U.S. holders may not be able to exercise the preemptive rights
relating to the preferred shares underlying their ADSs unless a registration
statement under the Securities Act is effective with respect to those rights or
an exemption from the registration requirements of the Securities Act is
available.

</FONT>
<P align="center"><FONT size="2">131</FONT>

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<P align="left"><FONT size="2"><B><I>Redemption, Amortization, Tender Offers and Rights of Withdrawal</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The bylaws of a company or the shareholders at a shareholders&#146; meeting may
authorize the use of profits or reserves to redeem or amortize shares in
accordance with conditions and procedures established for such redemption or
amorization. The Brazilian Corporate Law defines redemption (<I>resgate de a&#231;&#245;es</I>)
as the payment of the value of the shares in order to permanently remove such
shares from circulation, with or without a corresponding reduction of the
company&#146;s total capital. The Brazilian Corporate Law defines amortization
(<I>amortiza&#231;&#227;o</I>) as the distribution to the shareholders, without a corresponding
capital reduction, of amounts that they would receive if the company were
liquidated. If an amortization has been effected, the shareholders who
received an amortization distribution will receive, upon the eventual
liquidation of the Company, a <I>pro rata </I>portion of any remaining capital after
the other shareholders that did not participate in the amortization transaction
receive the amount that they would have received had they received an
amortization distribution.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Brazilian Corporate Law authorizes the Company to redeem shares not held
by the controlling shareholder if, after a tender offer, the controlling
shareholder of the Company increases its participation in the total share
capital of the Company to more than 95%. The redemption price in such case
would be the same price paid for the shares in the tender offer.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, the Brazilian Corporate Law and the Company&#146;s bylaws require
the Company to make a tender offer for shares held by minority shareholders
under certain circumstances described below, and permit dissenting shareholders
to withdraw their capital from the Company under certain circumstances
described below.
</FONT>
<P align="left"><FONT size="2"><B><I>Mandatory Tender Offers</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Brazilian Corporate Law requires that if the Company is delisted or there
is a substantial reduction in liquidity of the shares of the Company, as
defined by the CVM, in each case as a result of purchases by the controlling
shareholders of the Company, the controlling shareholders must effect a tender
offer for the remanining shares of the Company at a purchase price equal to the
fair value of the shares taking into account the total number of outstanding
shares.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Brazilian Corporate Law also requires any acquiror of direct or indirect
control of the Company to make a tender offer for the Company&#146;s remaining
common shares and preferred shares not owned by the acquiror, in each case, at
a price equal to 80% of the price per share paid for the controlling block of
shares. In addition, the Brazilian Corporate Law provides that public
companies, including the Company, must grant its preferred shareholders at
least one of the following three rights:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the right to participate in the distribution of the mandatory
distribution in accordance with the following criteria: (1)&nbsp;priority in
the receipt of dividends corresponding to at least 3% of the preferred
shares&#146; book value; and (2)&nbsp;the right to participate equally in the
distribution of profits with the common shares after the common shares
have received dividends equal to at least 3% of the book value of the
common shares;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the right to receive dividends in an amount per share at least 10%
higher than the amount per share paid to holders of common shares; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">tag-along rights of at least 80% of the price paid to the
controlling shareholder in case of transfer of control and dividends at
least equal to the dividends paid to the holders of common shares.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s bylaws provide that all of the Company&#146;s shares will be
entitled to tag-along rights in the event that the control of the Company is
transferred, with all shares receiving the same price per share paid to the
controlling shareholders.
</FONT>
<P align="center"><FONT size="2">132</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the controlling shareholders enter into a transaction which results in
a change of control of the Company, the controlling shareholders must include
in the documents governing such transaction an obligation on the part of the
acquiring party to make a public offer for the purchase of all common shares
and preferred shares issued by the Company for the same price per share paid to
the controlling shareholders. The tender offer must be made within a period of
30&nbsp;days prior to the formal transfer of the shares representing the controlling
stake and is effected through the financial institution responsible for the
custody of the Company&#146;s shares.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s bylaws provide that no change of control will be deemed to
occur if the party acquiring control is an existing member of the block of
controlling shareholders, and/or a signatory to an agreement among the
Company&#146;s shareholders governing the exercise of rights over the shares held by
the controlling shareholders. The Company&#146;s bylaws also provide that the
tag-along right will not apply in the event that the change of control occurs
as a result of:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a court ruling or act, such as a judicial seizure or execution; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a final decision by regulatory authorities, including CADE, that
obliges the controlling shareholders of the Company to divest part or
all of their shares in the Company.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><B><I>Rights of Withdrawal</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Brazilian law provides that, under certain limited circumstances, a
dissenting shareholder may withdraw its equity interest from the Company and be
reimbursed by the Company for the value of the common or preferred shares that
it holds.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This right of withdrawal may be exercised by the holders of the adversely
affected common or preferred shares if the Company decides:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">to create a new class of preferred shares or to disproportionately
increase an existing class of preferred shares relative to the other
classes of preferred shares (unless such actions are provided for or
authorized by the bylaws, which permit the Company to modify the
proportion between the various classes of the Company&#146;s preferred
shares); or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">to modify a preference, privilege or condition of redemption or
amortization conferred on one or more classes of preferred shares, or
to create a new class of preferred shares with greater privileges than
the existing classes of preferred shares.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">to merge into another company or to consolidate with another company;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">to transfer all of the Company&#146;s shares to another company, known as an <I>incorpora&#231;&#227;o de a&#231;&#245;es</I>;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">to participate in a centralized
group of companies as defined under the Brazilian Corporate Law;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">to reduce the mandatory distribution;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">to change the Company&#146;s corporate purposes;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">to spin-off a portion of the Company&#146;s company, subject to certain
conditions set forth in the Brazilian Corporate Law; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">to create founder shares
(<I>partes benefici&#225;rias</I>).</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">133</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a general rule, shareholders who acquire their shares after the first
notice convening the relevant shareholders&#146; meeting or after a press release
concerning the relevant shareholders&#146; meeting is published will not be entitled
to withdrawal rights.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This right of withdrawal may also be exercised if the entity resulting
from a merger, <I>incorpora&#231;&#227;o de a&#231;&#245;es</I>, or consolidation or spin-off of the
Company fails to become a listed company within 120&nbsp;days of the shareholders&#146;
meeting at which such decision was taken (one of the companies involved must be
a public company prior to the merger). Furthermore, if a governmental entity
acquires control of the Company through expropriation of shares, shareholders
may withdraw from the Company and be reimbursed for the value of the
shareholders&#146; equity attributable to their equity interest.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any redemption of shares arising out of the exercise of any withdrawal
rights would be made at book value per share, determined on the basis of their
most recent audited balance sheet approved by the shareholders. However, if
the shareholders&#146; meeting approving the action giving rise to withdrawal rights
occurred more than 60&nbsp;days after the date of the most recent approved audited
balance sheet, a shareholder may demand that his or her shares be valued
on the basis of a balance sheet dated within 60&nbsp;days of such shareholders&#146;
meeting. The right of withdrawal lapses 30&nbsp;days after the date of publication
of the minutes of the shareholders&#146; meeting that approved the corporate action
described above. The Company may reconsider any action giving rise to
withdrawal rights within 10&nbsp;days following the expiration date for such rights
if it believes that the withdrawal of shares of dissenting shareholders would
jeopardize the Company&#146;s financial stability.
</FONT>
<P align="left"><FONT size="2"><B><I>Liability of The Company&#146;s Shareholders for Further Capital Calls</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Neither Brazilian law nor the Company&#146;s bylaws provide for any capital
calls. The Company&#146;s shareholders&#146; liability for capital calls is limited to
the payment of the issue price of the shares subscribed or acquired.
</FONT>
<P align="left"><FONT size="2"><B><I>Disclosures of Share Ownership</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Brazilian regulations require that the controlling shareholders, directly
or indirectly, and the shareholders who have elected members of the Board of
Directors, as well as any person or group of persons representing a person that
has directly or indirectly acquired or sold an interest corresponding to at
least 5% of the total number of shares of any type or class, to disclose its
share ownership or divestment to the CVM and the BOVESPA and the Brazilian OTC
Market (or the over-the-counter markets), as the case may be. In addition, a
statement containing the required information must be published, unless the CVM
waives compliance with this rule. Any subsequent increase or decrease by 5% or
more in the ownership of shares of any type or class must be similarly
disclosed.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s controlling shareholders, shareholders that appoint members
of the Board of Directors or Fiscal Council and members of the Board of
Directors, Board of Executive Officers or Fiscal Council must immediately file
a statement of any change in their holdings of the Company&#146;s shares with the
CVM and the Brazilian stock exchanges (or the over-the-counter markets) on
which the Company&#146;s securities are traded.
</FONT>
<P align="left"><FONT size="2"><B><I>Restrictions on Non-Brazilian Holders</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-Brazilian holders do not face any legal restrictions on the ownership
of the Company&#146;s common or preferred shares or of ADSs based on the Company&#146;s
common or preferred shares, and are entitled to all the rights and preferences
of such common or preferred shares, as the case may be.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;However, the ability to convert dividend payments and proceeds from the
sale of common or preferred shares or preemptive rights into foreign currency
and to remit such amounts outside Brazil is subject to restrictions under
foreign investment legislation which generally requires, among other things,
the registration of the relevant equity investment with the Central Bank of
Brazil. For a description of these exchange control restrictions and foreign
investment legislation, see &#147;Item&nbsp;3. Key Information&#151;Exchange Rates.&#148;
Nonetheless, any non-Brazilian holder who registers with the CVM in accordance
with Resolution No.&nbsp;2,689 may buy and sell securities on the BOVESPA without
obtaining a separate certificate of registration from the Central Bank for each
transaction.
</FONT>
<P align="center"><FONT size="2">134</FONT>
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<P align="left"><FONT size="2"><B><I>Form and Transfer</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s preferred shares and common shares are in book-entry form
registered in the name of each shareholder or its nominee. The transfer of the
Company&#146;s shares is governed by Article&nbsp;35 of the Brazilian Corporate Law,
which provides that a transfer of shares is effected by the Company&#146;s transfer
agent, Banco Ita&#250; S.A., by an entry made by the transfer agent in its books,
upon presentation of valid share transfer instructions to the Company by a
transferor or its representative. When preferred or common shares are acquired
or sold on a Brazilian stock exchange, the transfer is effected on the records
of the Company&#146;s transfer agent by a representative of a brokerage firm or the
stock exchange&#146;s clearing system. The transfer agent also performs all the
services of safe keeping of the Company&#146;s shares. Transfers of shares by a
foreign investor are made in the same manner and are executed on the investor&#146;s
behalf by the investor&#146;s local agent. If the original investment was
registered with the Central Bank pursuant to foreign investment regulations,
the foreign investor is also required to amend, if necessary, through its local
agent, the certificate of registration to reflect the new ownership.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The BOVESPA operates a central clearing system through CBLC. A holder of
the Company&#146;s shares may choose, at its discretion, to participate in this
system, and all shares that such shareholder elects to be put into the system
are deposited in custody with CBLC (through a Brazilian institution that is
duly authorized to operate by the Central Bank and maintains a clearing account
with CBLC). Shares are subject to the custody of the CBLC are noted as such in
the Company&#146;s registry of shareholders. Each participating shareholder will,
in turn, be registered in the register of beneficial shareholders of the
Company that is maintained by CBLC and are treated in the same manner as
registered shareholders.
</FONT>
<P align="left"><FONT size="2"><B>Material Contracts</B>
</FONT>

<P align="left"><FONT size="2"><B><I>Naphtha and Gas Oil Purchase and Sale Contract</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;22, 1978, Petrobras and the Company entered into the Naphtha and
Gas Oil Purchase and Sale Contract. The Company&#146;s predecessor, Copene, filed
an English translation of this contract with the Commission on September&nbsp;30,
1998 as Exhibit&nbsp;3.04 to its Registration Statement on Form&nbsp;20-F. On February
8, 1993, Petrobras and the Company entered into the First Amendment to Naphtha
and Gas Oil Purchase and Sale Contract (the &#147;First Amendment&#148;). The Company&#146;s
predecessor, Copene, filed an English translation of this amendment with the
Commission on September&nbsp;30, 1998 as Exhibit&nbsp;3.05 to its Registration Statement
on Form&nbsp;20-F. On February&nbsp;24, 2003, Petrobras and the Company, with the
acknowledgement of OPP Qu&#237;mica, entered into the Second Amendment to Naphtha
and Gas Oil Purchase and Sale Contract (the &#147;Second Amendment&#148;). The Second
Amendment is attached as exhibit 4.03 to this annual report.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Naphtha and Gas Oil Purchase and Sale Contract, as amended:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Petrobras agrees to sell and deliver to the Company naphtha and gas
oil for use by the Company as raw materials at its basic petrochemicals
plants in the Northeastern Complex;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the contract provides minimum and maximum volumes of naphtha and
gas oil to be supplied by Petrobras and purchased by the Company
through 1994;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">after 1994, the Company may establish on September&nbsp;30 of each year
the volume that it expects to consume in the following calendar year;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">if the Company requests to purchase more volumes of naphtha and gas
oil than projected on an annual basis, Petrobras must use its best
efforts to meet this higher demand, but is not required to meet such
higher demand;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">if the Company fails to purchase the minimum volumes that it agreed
to purchase in any given year, the Company will be required to pay
Petrobras damages, and if Petrobras fails to deliver to the Company the
minimum volumes that it agreed to deliver in any given year, Petrobras
will be required to pay the Company damages;</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">135</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Petrobras can suspend deliveries under the contract, in whole or in
part, or may terminate the contract without penalties if required by
the ANP as a result of a national contingency plan that affects the
supply of petroleum derivatives in Brazil; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the term of the Amended Naphtha and Gas Oil Purchase and Sale
Contract is ten years and is automatically renewable.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Petrobras has provided a R$570&nbsp;million credit line to the Company to
purchase naphtha and gas oil, which is guaranteed by first mortgages
(formalized under a Public Deed of Mortgage) on two parcels of property owned
by the Company (which property belonged to OPP Qu&#237;mica prior to its merger with
and into the Company on March&nbsp;31, 2003).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has not entered into any other material contracts other than
those entered into in the ordinary course of business or those disclosed
elsewhere within this Form&nbsp;20-F.
</FONT>
<P align="left"><FONT size="2"><B>Exchange Controls</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are no restrictions on ownership or voting of Braskem&#146;s capital
stock by individuals or legal entities domiciled outside Brazil.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The right to convert dividend payments and proceeds from the sale of the
Company&#146;s capital stock into foreign currency and to remit such amounts outside
Brazil is subject to restrictions under foreign investment legislation which
generally requires, among other provisions, registration of the relevant
investment with the Central Bank. Restrictions on the remittance of foreign
capital abroad could hinder or prevent Banco Ita&#250; S.A. (the &#147;Custodian&#148;), as
custodian for the Preferred Shares represented by Preferred ADSs or holders who
have exchanged Preferred ADSs for Preferred Shares, from converting dividends,
distributions or the proceeds from any sale of Preferred Shares into U.S.
dollars and remitting such U.S. dollars abroad. Holders of Preferred ADSs
could be adversely affected by delays in, or refusal to grant any required
government approval for conversions of Brazilian currency payments and
remittances abroad in respect of the Preferred Shares underlying the Preferred
ADSs. See &#147;&#150; Risk Factors &#150; Exchange Controls and Restrictions on Remittances
Abroad May Adversely Affect Holders of ADSs.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Resolution No.&nbsp;1,927 of the National Monetary Council, which is the
Amended and Restated Annex V to Resolution No.&nbsp;1,289 (the &#147;Annex V
Regulations&#148;), provides for the issuance of depositary receipts in foreign
markets in respect of shares of Brazilian issuers. The Central Bank and the CVM
have approved the issuance of the ADSs under the Annex V Regulations.
Accordingly, the proceeds from the sale of the ADSs by ADR holders outside
Brazil are not subject to Brazilian foreign investment controls, and holders of
the ADSs are entitled to favorable tax treatment. See &#147;&#150; Taxation &#150; Brazilian
Tax Considerations.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A certificate of capital registration has been issued in the name of
Citibank, N.A., as Depositary for the Preferred Class&nbsp;A ADRs (the
&#147;Depositary&#148;), and is maintained by the Custodian on behalf
of the Depositary. Pursuant to the certificate, the Custodian and the
Depositary may convert dividends and other distributions with respect to the
Preferred Class&nbsp;A Shares represented by Preferred Class&nbsp;A ADRs into foreign
currency and remit the proceeds in foreign currency outside Brazil. In the
event that a holder of Preferred Class&nbsp;A ADRs exchanges Preferred Class&nbsp;A ADRs
for Preferred Class&nbsp;A Shares, such holder may continue to rely on the
Depositary&#146;s certificate of capital registration for only five business days
following such exchange, and thereafter such holder must seek to obtain its
own certificate of capital registration with the Central Bank. Thereafter,
unless the Preferred Class&nbsp;A Shares are held pursuant to the &#147;Annex IV
Regulations&#148; of the National Monetary Council by a duly qualified investor,
such holder may not be able to convert into foreign currency and remit outside
Brazil the proceeds from the disposition of, or distributions with respect to,
such Preferred Class&nbsp;A Shares, and such holder generally will be subject to
less favorable Brazilian tax treatment than a holder of Preferred Class&nbsp;A ADRs.
See &#147;&#150; Taxation &#150; Brazilian Tax Considerations.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company makes all cash distributions with respect to its shares,
including the Preferred Class&nbsp;A Shares, solely in Brazilian currency.
Accordingly, exchange rate fluctuations may reduce the U.S. dollar amounts
received by the holders of Preferred Class&nbsp;A ADSs on conversion by the
Depositary of such distributions into U.S. dollars for payment to holders of
Preferred Class&nbsp;A ADSs. Fluctuations in the exchange rate between <I>reais </I>and the
U.S. dollar may also reduce the U.S. dollar equivalent of the <I>reais </I>price of
the Preferred Class&nbsp;A Shares on the Brazilian stock exchanges. See &#147;Item&nbsp;3.
Key Information&#151;Exchange Rates<I>.&#148;</I>
</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Brazilian law provides that, whenever there is a serious imbalance in
Brazil&#146;s balance of payments or serious reasons to foresee such imbalance,
temporary restrictions may be imposed on remittances of foreign capital abroad.
For approximately six months in 1989 and early 1990, for example, to attempt to
conserve Brazil&#146;s foreign currency reserves, the Brazilian government froze all
dividend and capital repatriations that were owed to foreign equity investors.
These amounts were subsequently released in accordance with Brazilian
Government directives. There can be no assurance that similar measures will not
be taken by the Brazilian Government in the future. See &#147;&#150; Risk Factors &#150;
Exchange Controls and Restrictions on Remittances Abroad May Adversely Affect
Holders of ADSs.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For a
description of the foreign exchange markets in Brazil, see &#147;Item
3. Key
Information &#150; Selected Financial Data &#150; Exchange Rates.&#148;
</FONT>
<P align="left"><FONT size="2"><B>Taxation</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following summary contains a description of the principal Brazilian
and U.S. federal income tax consequences of the purchase, ownership and
disposition of Preferred Class&nbsp;A Shares and Preferred Class&nbsp;A ADRs, but it does
not purport to be a comprehensive description of all of the tax considerations
that may be relevant to a decision to purchase any such securities. In
particular, for U.S. federal income tax purposes, this summary is applicable
only to holders that hold Preferred Class&nbsp;A Shares or Preferred Class&nbsp;A ADRs as
&#147;capital assets&#148; within the meaning of Section&nbsp;1221 of the Internal Revenue
Code of 1986, as amended (the &#147;Code&#148;), and does not address the tax treatment
of a holder that may be subject to special tax rules, such as financial
institutions, insurance companies, real estate investment trusts, regulated
investment companies, grantor trusts, tax-exempt entities, traders or dealers
in securities or currencies, persons that will hold Preferred Class&nbsp;A Shares or
Preferred Class&nbsp;A ADRs in a hedging transaction or as a position in a
&#147;straddle&#148; or &#147;conversion transaction&#148; for U.S. federal income tax purposes,
persons that have a &#147;functional currency&#148; other than the U.S. dollar, persons
that will hold Preferred Class&nbsp;A Shares or Preferred Class&nbsp;A ADRs as
compensation for the performance of services, persons liable for alternative
minimum tax or estate and gift tax or persons that own or are treated as owning
10% or more of the voting shares or value of the Company. Prospective
purchasers of any of such securities should consult their own tax advisors as
to the Brazilian, U.S. or other tax consequences of the purchase, ownership and
disposition of Preferred Class&nbsp;A Shares or Preferred Class&nbsp;A ADRs, including,
in particular, the effect of any foreign, state or local tax laws.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The summary is based upon the tax laws of Brazil and the United States and
regulations thereunder and administrative and judicial interpretations thereof,
in each case as in effect and available on the date hereof, which are subject
to change (possibly with retroactive effect), and to differing interpretations.
There is at present no income tax treaty between Brazil and the United States.
This summary is also based upon the representations of the Depositary and on
the assumption that each obligation in the Deposit Agreement relating to the
Preferred Class&nbsp;A ADRs and any related documents will be performed in
accordance with its terms.
</FONT>
<P align="left"><FONT size="2"><B><I>Brazilian Tax Considerations</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following discussion summarizes the principal Brazilian tax
consequences of the acquisition, ownership and disposition of Preferred Class&nbsp;A
Shares or Preferred Class&nbsp;A ADRs by a holder that is not domiciled in Brazil
for purposes of Brazilian taxation and, in the case of a holder of Preferred
Shares, which has registered its investment in such securities with the Central
Bank as a U.S. dollar investment (in each case, a &#147;non-Brazilian holder&#148;). The
following discussion does not specifically address all of the Brazilian tax
considerations applicable to any particular non-Brazilian holder, and each
non-Brazilian holder should consult his or her own tax advisor concerning the
Brazilian tax consequences of an investment in any of such securities.
</FONT>
<P align="center"><FONT size="2">137</FONT>
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<P align="left"><FONT size="2"><I>Taxation of dividends</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends paid with respect to income earned since January&nbsp;1, 1996,
including dividends paid in kind (1)&nbsp;to the Depositary in respect of the
Preferred Class&nbsp;A Shares underlying the Preferred Class&nbsp;A ADRs or (2)&nbsp;to a
non-Brazilian holder in respect of Preferred Class&nbsp;A Shares, are not subject to
any withholding tax in Brazil. The new tax legislation eliminated the then
existing 15% withholding tax on dividends paid to companies, resident
individuals or non-residents in Brazil. Accordingly, dividends with respect to
profits generated on or after January&nbsp;1, 1996 are not subject to withholding
tax in Brazil. Dividends related to profits generated in the years of 1994 and
1995 shall be subject to withholding tax at the rate of 15% at the time of its
distribution.
</FONT>
<P align="left"><FONT size="2"><I>Taxation of gains</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gains realized outside Brazil by a non-Brazilian holder on the disposition
of Preferred Class&nbsp;A ADRs to another non-Brazilian holder are not subject to
Brazilian tax.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The withdrawal of Preferred Class&nbsp;A Shares in exchange for Preferred Class
A ADRs is not subject to Brazilian tax. The deposit of Preferred Class&nbsp;A
Shares in exchange for Preferred Class&nbsp;A ADRs is not subject to Brazilian tax
provided that the Preferred Shares are registered by the investor or its agent
under the provisions of Resolution No.
2,689/00 of the National Monetary Council. In the event the Preferred
Class&nbsp;A Shares are not so registered, the deposit of Preferred Class&nbsp;A Shares
in exchange for Preferred Class&nbsp;A ADRs may be subject to Brazilian capital
gains tax at the rate of 15%. On receipt of the underlying Preferred Shares, a
non-Brazilian holder who qualifies under Resoluton No.&nbsp;2689/00 will be entitled
to register the U.S. dollar value of such shares with the Central Bank as
described below.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-Brazilian holders are not subject to tax in Brazil on gains realized
on sales of Preferred Class&nbsp;A Shares that occur abroad or on the proceeds of a
redemption of, or a liquidating distribution with respect to, Preferred Class&nbsp;A
Shares. As a general rule: (1)&nbsp;non-Brazilian holders are subject to a
withholding tax imposed at the rate of 15% on gains realized on sales or
exchanges of Preferred Class&nbsp;A Shares that occur in Brazil to or with a
resident of Brazil; and (2)&nbsp;at the rate of 20% on gains realized on sales or
exchanges in Brazil of Preferred Class&nbsp;A Shares that occur on a Brazilian stock
exchange. This general rule is not applicable if such sales are made on a
Brazilian stock exchange within five business days of the withdrawal of such
Preferred Class&nbsp;A Shares in exchange for Preferred Class&nbsp;A ADRs and the
proceeds thereof are remitted abroad within such five-day period or such sales
are made under the provisoins of Resoultion No.&nbsp;2,689/00. In the event that
the sale or exchange of Preferred Class&nbsp;A Shares is made on a Brazilian stock
exchange and in accordance with the provisions of Resolution 2,689/00 or of
Annex V to Resolution No.&nbsp;1,289/87, any capital gain resulting from such sale
or exchange is exempt from withholding income tax in Brazil (except where the
sale or exchange was structured to occur when the capital gain resulting
therefrom reached an amount certain). The &#147;gain realized&#148; as a result of a
transaction on a Brazilian stock exchange is the difference between the amount
in Brazilian currency realized on the sale or exchange and the acquisition
cost, without any correction for inflation, of the shares sold. The &#147;gain
realized&#148; as a result of a transaction that occurs other than on a Brazilian
stock exchange will be calculated based on the foreign currency amount
registered with the Central Bank. There can be no assurance that the current
preferential treatment for holders of Preferred Class&nbsp;A ADSs and non-Brazilian
holders of Preferred Class&nbsp;A Shares under the provisions of Resolution No.
2,689/00 will continue in the future or that such treatment will not be changed
in the future.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any exercise of preemptive rights relating to the Preferred Class&nbsp;A Shares
will not be subject to Brazilian taxation. Any gain on the sale or assignment
of preemptive rights relating to the Preferred Class&nbsp;A Shares by the Depositary
will not be subject to Brazilian taxation.
</FONT>
<P align="left"><FONT size="2"><I>Interest on equity</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributions of interest on net worth in respect of the Preferred Class&nbsp;A
Shares as an alternative form of payment to shareholders who are either
Brazilian residents or non-Brazilian residents, including holders of ADRs, are
subject to Brazilian withholding tax at the rate of 15%. Since 1997, the
payments are deductible in determining social welfare contributions and income
tax payable by the Company as long as the payment of a distribution of
interest
is approved in the Company&#146;s General Meeting, according to the terms of Law
9249/95 and Law 9430/96. The distribution of interest on shareholders&#146; equity
may be determined by the Board of Directors of the Company alone. No assurance
can be given that the Board of Directors of the Company will not determine that
future distributions of profits be made by means of interest on shareholders&#146;
equity instead of by means of dividends.
</FONT>

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<P align="left"><FONT size="2"><I>Other Brazilian taxes</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are no Brazilian inheritance, gift or succession taxes applicable to
the ownership, transfer or disposition of Preferred Class&nbsp;A Shares or Preferred
Class&nbsp;A ADRs by a non-Brazilian holder except for gift and inheritance taxes
which are levied by some states of Brazil on gifts made or inheritances
bestowed by individuals or entities not resident or domiciled in Brazil or
domiciled within the state to individuals or entities resident or domiciled
within such state in Brazil. There are no Brazilian stamp, issue, registration
or similar taxes or duties payable by holders of Preferred Class&nbsp;A Shares or
Preferred Class&nbsp;A ADRs.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to Decree 2,219 of May&nbsp;2, 1997, the amount in <I>reais </I>resulting
from the conversion of the proceeds received by a Brazilian entity from a
foreign investment in the Brazilian securities market (including those in
connection with the investment in the Preferred Class&nbsp;A Shares or Preferred
Class&nbsp;A ADRs and those made under the provisions of Resolution No.&nbsp;2,689/000)
is subject to a transaction tax (&#147;IOF&#148;), although at present the rate of such
tax is 0%. The Minister of Finance is empowered to establish the
applicable IOF tax rate. Under Law 8,894 of June&nbsp;21, 1994, such IOF tax rate
may be increased at any time to a maximum of 25%, but any such increase will
only be applicable to transactions occurring after such increase becomes
effective.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the Brazilian Constitution (E.C. No.&nbsp;21/99), the <I>Contribui&#231;&#227;o
Provis&#243;ria sobre Movimenta&#231;&#227;o Financeira </I>(the &#147;CPMF tax&#148;) was levied at a rate
of 0.38%, in the first twelve months after June&nbsp;17, 1999, 0.30% from June 2000
until March&nbsp;17, 2001, and back to 0.38% after that through the present on all
fund transfers in connection with financial transactions in Brazil. Payments of
dividends on the Preferred Class&nbsp;A Shares (and the Preferred Class&nbsp;A ADSs) are
subject to the CPMF tax. However, only the Company is liable for the CPMF tax
on its dividends, which are payable without reduction for this tax. There can
be no assurance that the Brazilian government will not extend the payment of
the CPMF tax beyond that time, or will convert it into a new permanent tax.
</FONT>
<P align="left"><FONT size="2"><I>Resident in tax haven</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The general rules establish that any income or earnings received by a
beneficiary resident in a tax haven is subject to income tax at the rate of
25%. A tax haven is a location where no income tax is imposed or where its
maximum applicable rate is lower than 20%. Tax benefits granted through the
provisions of Resolution No.&nbsp;2,689/00 are not applicable to residents in a
so-called tax haven country. In this case, such investors shall be taxed
according to the same rules that are applicable to Brazilian residents.
Dividends and capital gains are not affected by tax haven rules. However, the
preferential tax treatment applicable to capital gains arising out of sales or
exchanges of equity securities that settle through an official stock market and
are otherwise effected in accordance with the provisions of Resolution No.
2,689/00 is not applicable if the investor is domiciled or resides in a tax
haven.
</FONT>
<P align="left"><FONT size="2"><I>Registered capital</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The amount of an investment in Preferred Class&nbsp;A Shares held by a
non-Brazilian holder who qualifies and registers with the CVM under the
provisions of Resolution No.&nbsp;2,689/00 or in ADSs held by the Depositary
representing such holder, as the case may be, is eligible for registration with
the Central Bank; such registration (the amount so registered is referred to as
&#147;Registered Capital&#148;) allows the remittance outside Brazil of foreign currency,
converted at the Commercial Market Rate, acquired with the proceeds of
distributions on, and amounts realized with respect to disposition of, such
Preferred Class&nbsp;A Shares. The Registered Capital for Preferred Class&nbsp;A Shares
purchased in the form of a Preferred Class&nbsp;A ADRs, or purchased in Brazil and
deposited with the Depositary in exchange for a Preferred Class&nbsp;A ADS, will be
equal to their purchase price (in U.S. dollars) paid by the purchaser. The
Registered Capital for Preferred Class&nbsp;A Shares that are withdrawn upon
surrender of Preferred Class&nbsp;A ADSs, will be the U.S. dollar equivalent of (1)
the average price of the Preferred Class&nbsp;A Shares on the Brazilian stock
exchange on which the greatest number of such Preferred Class&nbsp;A Shares was sold
on the day of withdrawal, or (2)&nbsp;if no Preferred Class&nbsp;A Shares were sold on
such day, the average price of Preferred Shares that were sold in the fifteen
trading sessions immediately preceding such withdrawal. The U.S. dollar value
of the Preferred Class&nbsp;A Shares is determined on the basis of the average
Commercial Market rates quoted by the Central Bank on such date (or, if the
average price of Preferred Class&nbsp;A Shares is determined under clause (2)&nbsp;of the
preceding sentence, the average of such average quoted rates on the same
fifteen dates used to determine the average price of the Preferred Class&nbsp;A
Shares).
</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A non-Brazilian holder of Preferred Class&nbsp;A Shares may experience delays
in effecting the registration of Registered Capital which may delay remittances
abroad. Such a delay may adversely affect the amount, in U.S. dollars,
received by the non-Brazilian holder.
</FONT>
<P align="left"><FONT size="2"><B><I>U.S. Federal Income Tax Considerations</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As used below, a &#147;U.S. holder&#148; is a beneficial owner of a Preferred Class
A Share or Preferred Class&nbsp;A ADS that is, for U.S. federal income tax purposes,
(1)&nbsp;an individual citizen or resident of the United States, (2)&nbsp;a partnership
or corporation organized under the laws of the United States, any State thereof
or the District of Columbia, (3)&nbsp;an estate the income of which is subject to
U.S. federal income taxation regardless of its source, (4)&nbsp;a
trust if such trust validly elects to be treated as a United States person
for U.S. federal income tax purposes or if (a)&nbsp;a court within the United States
is able to exercise primary supervision over its administration and (b)&nbsp;one or
more United States persons have the authority to control all of the substantial
decisions of such trust or (5)&nbsp;any other person or entity that is subject to
U.S. federal income tax on a net income basis in respect of the Preferred Class
A Shares or Preferred Class&nbsp;A ADSs (including a nonresident alien individual or
foreign corporation whose income with respect to a Preferred Class&nbsp;A Share or
Preferred Class&nbsp;A ADS is effectively connected with the conduct of a U.S. trade
or business). As used below, a &#147;Non-U.S. holder&#148; is a beneficial owner of a
Preferred Class&nbsp;A or Preferred Class&nbsp;A ADS that is not a U.S. holder.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a partnership (or any other entity treated as a partnership for U.S.
federal income tax purposes) holds Preferred Class&nbsp;A Shares or Preferred Class
A ADSs, the tax treatment of a partner in such partnership will generally
depend on the status of the partner and the activities of the partnership.
Such a partner should consult its tax advisor as to its tax consequences.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general, for U.S. federal income tax purposes, a holder of an ADR
evidencing an ADS will be treated as the beneficial owner of the Preferred
Class&nbsp;A Shares represented by the applicable ADS. The U.S. Treasury Department
has expressed concern that depositaries for ADRs, or other intermediaries
between the holders of shares of an issuer and the issuer, may be taking
actions that are inconsistent with the claiming of U.S. foreign tax credits by
U.S. holders of such receipts or shares. Accordingly, the analysis regarding
the availability of a United States foreign tax credit for Brazilian taxes and
sourcing rules described below could be affected by future actions that may be
taken by the U.S. Treasury Department.
</FONT>
<P align="left"><FONT size="2"><I>Taxation of dividends</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the discussion below under &#147;Passive Foreign Investment Company
Rules,&#148; in general, a distribution made with respect to a Preferred Class&nbsp;A
Share or Preferred Class&nbsp;A ADS (which for this purpose will include
distributions of interest on equity) will, to the extent made from the current
or accumulated earnings and profits of the Company, as determined under U.S.
federal income tax principles, constitute a dividend to a U.S. holder for U.S.
federal income tax purposes. Subject to the discussion below under &#147;Passive
Foreign Investment Company Rules,&#148; with respect to dividends received in
taxable years after December&nbsp;31, 2002 with respect to Preferred Class&nbsp;A Shares
that are represented by Preferred Class&nbsp;A ADSs, individuals who are U.S.
holders will be taxed on such distributions at the lower rates applicable to
long-term capital gains. Subject to the discussion below under &#147;Passive
Foreign Investment Rules,&#148; if a distribution exceeds the amount of the
Company&#146;s current and accumulated earnings and profits, it will be treated as a
non-taxable return of capital to the extent of the U.S. holder&#146;s tax basis in
the Preferred Class&nbsp;A Share or Preferred Class&nbsp;A ADS on which it is paid and
thereafter as capital gain. The Company does not
</FONT>
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<P align="left"><FONT size="2">maintain calculations of its
earnings and profits under U.S. federal income tax principles. As discussed
below, the term &#147;dividend&#148; means a distribution that constitutes a dividend for
U.S. federal income tax purposes.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The gross amount of any dividend paid (which will include any amounts
withheld in respect of Brazilian taxes) with respect to a Preferred Class&nbsp;A
Share or Preferred Class&nbsp;A ADS will be subject to U.S. federal income taxation
as foreign source dividend income, which may be relevant in calculating a U.S.
holder&#146;s foreign tax credit limitation, and will not be eligible for the
dividends received deduction generally allowed to U.S. corporations. A
dividend paid in Brazilian currency will be includible in the income of a U.S.
holder at its value in U.S. dollars calculated by reference to the prevailing
spot market exchange rate in effect on the day it is received by the U.S.
holder or, in the case of a dividend received in respect of Preferred Class&nbsp;A
ADSs, on the date the dividend is received by the Depositary, whether or not
the dividend is converted into U.S. dollars. Any gain or loss realized on a
subsequent conversion or other disposition of the Brazilian currency will be
treated as U.S. source ordinary income or loss. In the case of a U.S. holder
that is not a United States person, the currency gain or loss will be U.S.
source income only if the currency is held by a qualified business unit of the
U.S. holder in the United States.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to generally applicable limitations under U.S. federal income tax
law, the Brazilian withholding tax will be treated as a foreign income tax
eligible for credit against a U.S. holder&#146;s U.S. federal income tax liability.
For purposes of the computation of the foreign tax credit limitation separately
for specific categories of income, any dividends generally will constitute
foreign source &#147;passive income&#148; or, in the case of certain holders, &#147;financial
services income.&#148; Alternatively, a U.S. holder may elect not to claim a
credit for any of its foreign taxes and deduct all of those taxes in computing
taxable income.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the discussion below under &#147;Information Reporting and Backup
Withholding,&#148; a Non-U.S. Holder of Preferred Class&nbsp;A Shares or Preferred Class
A ADSs generally will not be subject to U.S. federal income or withholding tax
on dividends received on such shares or ADSs, unless such income is effectively
connected with the conduct by such Non-U.S. Holder of a trade or business in
the United States.
</FONT>
<P align="left"><FONT size="2"><I>Sale or exchange of shares or ADSs</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A deposit or withdrawal of Preferred Class&nbsp;A Shares by a holder in
exchange for a Preferred Class&nbsp;A ADS that represents such shares will not result
in the realization of gain or loss for U.S. federal income tax purposes. A U.S.
holder generally will recognize capital gain or loss upon a sale or other
exchange of a Preferred Class&nbsp;A Share or Preferred Class&nbsp;A ADS held by the U.S.
holder or the Depositary in an amount equal to the difference between the U.S.
holder&#146;s adjusted basis in the Preferred Class&nbsp;A Share or Preferred Class&nbsp;A ADS
(determined in U.S. dollars) and the U.S. dollar amount realized on the sale or
other exchange. If a Brazilian tax is withheld on the sale or exchange of a
share, the amount realized by a U.S. holder will include the gross amount of
the proceeds of that sale or exchange before deduction of the Brazilian tax.
In the case of a non-corporate U.S. holder, the maximum marginal U.S. federal
income tax rate applicable to capital gain will be lower than the maximum
marginal U.S. federal income tax rate applicable to ordinary income (other
than, in the case of taxable years beginning after December&nbsp;31, 2002, certain
dividends) if such holder&#146;s holding period for such Preferred Class&nbsp;A Share or
Preferred Class&nbsp;A ADS exceeds one year. Capital gain or loss, if any, realized
by a U.S. holder on the sale or exchange of a Preferred Class&nbsp;A Share or
Preferred Class&nbsp;A ADS generally will be treated as U.S. source income for U.S.
foreign tax credit purposes. Consequently, in the case of a disposition of a
Preferred Class&nbsp;A Share that is subject to Brazilian tax imposed on the gain
(or, in the case of a deposit, in exchange for a Preferred Class&nbsp;A ADS or a
Preferred Class&nbsp;A Share that is not registered under the Annex IV regulations,
on which a Brazilian capital gains tax is imposed) (See &#147;&#150; Brazilian Tax
Considerations &#150; Taxation of Gains&#148;), the U.S. holder may not be able to use
the foreign tax credit for that Brazilian tax unless it can apply the credit
against U.S. tax payable on other income from foreign sources in the
appropriate income category, or alternatively, it may take a deduction for the
Brazilian tax if it elects to deduct all of its foreign income taxes. In
general, any loss will be sourced to the taxpayer&#146;s residence (as specially
defined in Section&nbsp;865(g) of the Code), subject to certain exceptions that can
treat a loss recognized by a U.S. resident in whole or in part as a foreign
source loss. The deductibility of capital losses is subject to limitations.
The initial tax basis of Preferred Class&nbsp;A Shares
or Preferred Class&nbsp;A ADSs to
a U.S. holder will be the U.S. dollar value of the <I>real </I>denominated purchase
price determined on the date of purchase. If the Preferred Class&nbsp;A Shares or
Preferred Class&nbsp;A ADSs are treated as traded on an &#147;established securities
market,&#148; a cash basis U.S. holder, or, if it elects, an accrual basis U.S.
holder, will determine the dollar value of the cost of such Preferred Class&nbsp;A
Shares or
</FONT>
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<P align="left"><FONT size="2">Preferred Class&nbsp;A ADSs by translating the amount paid at the spot
rate of exchange on the settlement date of the purchase. The conversion of
U.S. dollars to <I>reais </I>and the immediate use of that currency to purchase
Preferred Class&nbsp;A Shares or Preferred Class&nbsp;A ADSs generally will not result in
taxable gain or loss for a U.S. holder.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With respect to the sale or exchange of Preferred Class&nbsp;A Shares or
Preferred Class&nbsp;A ADSs, the amount realized generally will be the U.S. dollar
value of the payment received determined on (1)&nbsp;the date of receipt of payment
in the case of a cash basis U.S. holder and (2)&nbsp;the date of disposition in the
case of an accrual basis U.S. holder. If the Preferred Class&nbsp;A Shares or
Preferred Class&nbsp;A ADSs are treated as traded on an &#147;established securities
market,&#148; a cash basis taxpayer, or, if it elects, an accrual basis taxpayer,
will determine the U.S. dollar value of the amount realized by translating the
amount received at the spot rate of exchange on the settlement date of the
sale.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the discussion below under &#147;Information Reporting and Backup
Withholding,&#148; a Non-U.S. holder of Preferred Class&nbsp;A Shares or Preferred Class
A ADSs generally will not be subject to U.S. federal income or withholding tax
on any gain realized on the sale or exchange of such shares or ADSs unless (1)
such gain is effectively connected with the conduct by such Non-U.S. holder of
a trade or business in the United States or (2)&nbsp;in the case of any gain
realized by an individual Non-U.S. holder, such holder is present in the United
States for 183&nbsp;days or more in the taxable year of such sale or exchange and
certain other conditions are met.
</FONT>
<P align="left"><FONT size="2"><I>Passive foreign investment company rules</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based upon the nature of its current and projected income, assets and
activities, the Company does not expect the Preferred Class&nbsp;A Shares or
Preferred Class&nbsp;A ADSs to be considered shares of a passive foreign investment
company (&#147;PFIC&#148;) for U.S. federal income tax purposes for the 2002 taxable
year. In general, a foreign corporation is a PFIC if, after applying certain
look-through rules, at least 75% of its gross income for the taxable year (or,
in general, a preceding taxable year in which the taxpayer owned stock in the
corporation) is passive income or if at least 50% of the average value of its
gross assets for the taxable year (or, in general, a preceding year in which
the taxpayer owned stock in the corporation) produce passive income or are held
for the production of passive income. In general, passive income for this
purpose includes dividends, interest, rents, royalties, and gains from
commodities and securities transactions. The determination of whether the
Preferred Class&nbsp;A Shares or Preferred Class&nbsp;A ADSs constitute shares of a PFIC
is a factual determination made annually, and therefore the Company&#146;s failure
to constitute a PFIC at one time is subject to change. The Company&#146;s status in
future years will depend on its assets and activities in those years. The
Company has no reason to believe that its assets or activities will change in a
manner that would cause it to be classified as a PFIC, but there can be no
assurance that the Company will not be considered a PFIC for any taxable year.
Subject to certain exceptions, once a U.S. holder&#146;s Preferred Class&nbsp;A Shares or
Preferred Class&nbsp;A ADSs are treated as shares of a PFIC, they remain shares in a
PFIC.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the Company is treated as a PFIC, contrary to the discussion in
&#147;Taxation of Dividends&#148; and &#147;Sale or Exchange of Shares or ADSs&#148; above, a U.S.
holder of Preferred Class&nbsp;A Shares or Preferred Class&nbsp;A ADSs generally would be
subject to imputed interest charges and other disadvantageous tax treatment
(including, with respect to dividends received in taxable years after December
31, 2002 with respect to Preferred Class&nbsp;A Shares that are represented by
Preferred Class&nbsp;A ADSs, the denial of the taxation of such dividends at the
lower rates applicable to long-term capital gains, as discussed above under
&#147;Taxation of Dividends&#148;) with respect to any gain from the sale or exchange of,
and certain distributions with respect to, the Preferred Class&nbsp;A Shares or
Preferred Class&nbsp;A ADSs.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the Company is treated as a PFIC, a U.S. holder of Preferred Class&nbsp;A
Shares or Preferred Class&nbsp;A ADSs could make a variety of elections that may
alleviate the tax consequences referred to above, and one of these elections
may be made retroactively. However, it is expected that the conditions
necessary for making certain of such elections will not apply in the case of
the Preferred Class&nbsp;A Shares or Preferred Class&nbsp;A ADSs. U.S. holders should
consult their own tax advisors regarding the tax consequences that would arise
if the Company is treated as a PFIC.
</FONT>
<P align="left"><FONT size="2"><I>Information reporting and backup withholding</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;United States backup withholding tax and information reporting
requirements generally apply to certain payments to certain noncorporate
holders of stock. Information reporting generally will apply to payments of
dividends on, and to proceeds from the sale or redemption of, Preferred Class&nbsp;A
Shares or Preferred Class&nbsp;A ADSs
made within the United States to a holder of
Preferred Class&nbsp;A Shares or Preferred Class&nbsp;A ADSs, other than an exempt
recipient, including a corporation, a payee that is not a United States person
that provides an appropriate certification and certain other persons. A payor
will be required to withhold backup withholding tax from any payments of
dividends on, or the proceeds from the sale or redemption of, Preferred Class&nbsp;A
Shares or Preferred Class&nbsp;A ADSs within the United States to a holder, other
than an exempt recipient, if such holder fails to furnish its correct taxpayer
identification number or otherwise fails to comply with, or establish an
exemption from, such backup withholding tax requirements. The backup
withholding tax rate was 30% for the year 2002 and is 28% for years 2003
through 2010.
</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the case of such payments made within the United States to a foreign
simple trust, a foreign grantor trust or a foreign partnership, other than
payments to a foreign simple trust, a foreign grantor trust or a foreign
partnership that qualifies as a &#147;withholding foreign trust&#148; or a &#147;withholding
foreign partnership&#148; within the meaning of certain U.S. Treasury Regulations
and payments to a foreign simple trust, a foreign grantor trust or a foreign
partnership that are effectively connected with the conduct of a trade or
business in the United States, the beneficiaries of the foreign simple trust,
the persons treated as the owners of the foreign grantor trust or the partners
of the foreign partnership, as the case may be, will be required to provide the
certification discussed above in order to establish an exemption from backup
withholding tax and information reporting requirements. Moreover, a payor may
rely on a certification
provided by a payee that is not a United States person only if such payor
does not have actual knowledge or a reason to know that any information or
certification stated in such certificate is incorrect.
</FONT>
<P align="left"><FONT size="2"><B>The above description is not intended to constitute a complete analysis of all
tax consequences relating to acquisition, ownership and disposition of
Preferred Class&nbsp;A Shares or Preferred Class&nbsp;A ADSs. Prospective purchasers
should consult their tax advisors concerning the tax consequences of their
particular situations.</B>
</FONT>
<P align="left"><FONT size="2"><B>Documents on Display</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Statements contained in this annual report regarding the contents of any
contract or other document are not necessarily complete, and where the contract
or other document is an exhibit to this annual report, each of these statements
is qualified in all respects by the provisions of the actual contract or other
documents.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is subject to the information requirements of the Exchange
Act, applicable to a foreign private issuer, and accordingly, the Company files
or furnishes reports, information statements and other information with the
Commission. These reports and other information may be inspected and copied at
the public reference room maintained by the Commission at 450 Fifth Street,
N.W., Room&nbsp;1024, Washington, D.C. 20549. Copies of this material also may be
obtained by mail from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference room.
Electronic filings made through the Electronic Data Gathering, Analysis and
Retrieval System (EDGAR)&nbsp;are also publicly available through the Commission&#146;s
web site on the Internet at http:\\www.sec.gov. These reports and other
information also may be inspected and copied at the offices of The New York
Stock Exchange, 20 Broad Street, New York, New York 10005.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a foreign private issuer, the Company is exempt from the proxy
requirements of Section&nbsp;14 of the Exchange Act and from the reporting and
&#147;short swing&#148; profit recovery provisions of Section&nbsp;16 of the Exchange Act,
although the rules of the New York Stock Exchange may require the Company to
solicit proxies from its shareholders under some circumstances.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company also files financial statements and other periodic reports
with the CVM.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Copies of the Company&#146;s annual reports on Form&nbsp;20-F and documents referred
to in this annual report and the Company&#146;s bylaws are also available for
inspection upon request at the Company&#146;s headquarters at: Av. Na&#231;&#245;es Unidas,
4777, S&#227;o Paulo, SP - CEP 05477-000 Brazil.
</FONT>

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<!-- link2 "ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK" -->
<DIV align="left"><A NAME="011"></A></DIV>
<P align="left"><FONT size="2"><B>ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Braskem is exposed to a number of market risks arising from its normal
business activities. Such market risks principally involve the possibility
that changes in commodity prices, currency exchange rates or interest rates
will adversely affect the value of its financial assets and liabilities or
future cash flows and earnings. Market risk is the potential loss arising from
adverse changes in market rate and prices. Braskem enters into derivatives and
other financial instruments for purposes other than trading, in order to manage
and reduce the impact of fluctuations in foreign currency exchange rates and
interest rates. Braskem has established policies and procedures for risk
assessment and the approval, reporting and monitoring of derivative financial
activities.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Braskem developed a risk management policy as from December&nbsp;31, 2001 with
the following objectives: maintain coverage of principal and interest
settlements (consolidated)&nbsp;maturing within 12&nbsp;months for, at least (i)&nbsp;60% of
Braskem&#146;s total U.S.-dollar indebtedness that is related to exports (trade
finance), excluding Advances on Currency Contracts (ACCs) with a remaining
maturity of up to 6&nbsp;months and Advances on Export Contracts (ACEs) and (ii)&nbsp;75%
of the total debt in U.S. dollars unrelated to exports (non-trade finance).
Compliance with this policy varies based upon applicable market conditions,
credit availability and cash balances.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To further mitigate its exposure to exchange rate risk, the Company tries,
when possible, to borrow for its working capital needs using trade finance
loans, which funding is generally available at a lower cost because it is
linked to the Company&#146;s U.S. dollar exports. The Company cannot assure,
however, that, in the future, U.S. dollar revenues that it generates from
exports will be in an amount sufficient to cover its U.S. dollar trade finance
liabilities.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;31, 2002, the Company had swap contracts for foreign currency
and interest, with a total notional amount of approximately U.S.$155.8&nbsp;million.
These instruments are intended to reduce the impacts of an eventual
devaluation of the <I>real </I>and an increase in international interest rates on U.S.
dollar liabilities. In addition, Braskem has U.S. dollar denominated cash
equivalents and time deposits, which partially offset the effects of
devaluation related to the U.S. dollar debt to the extent of the dollar
denominated cash and cash equivalents.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s derivative instruments do not qualify for deferral, hedge,
accrual or settlement accounting and are marked-to-market value, with the
resulting gains and losses reflected in the statement of operations within
financial income and expenses, respectively. See Note 16 to the Consolidated
Financial Statements for a discussion of the Company&#146;s accounting policies and
information on derivative financial instruments.
</FONT>
<P align="left"><FONT size="2"><B>Interest Rate Risk</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s variable interest rate exposure is primarily subject to the
variations of (1)&nbsp;LIBOR for U.S. dollar-denominated borrowings and (2)
long-term interest rates (the &#147;TJLP,&#148; which includes an inflation factor and is
determined quarterly by the Central Bank), short-term variable domestic
interbank interest rates (&#147;CDI&#148;) and the IGP-M for <I>reais</I>-denominated
borrowings. The improvement of economic conditions in Brazil during 2002 due
to political uncertainty surrounding Brazil&#146;s presidential
elections resulted in
a gradual increase of the interest rates in the fourth quarter, with (1)&nbsp;the
short-term domestic CDI rate ranging from 19.05% per annum in January 2002 to
24.09% per annum in December 2002 (average of 19.1% per annum), (2)&nbsp;the TJLP at
10% per annum in January 2002 before decreasing in April through June 2002 and
then returning to 10% per annum through December 2002 (averaging 9.88% per
annum in 2002) and (3)&nbsp;the IGP-M at approximately 25.3% in 2002.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The table below provides information
about the Company&#146;s significant interest-rate sensitive
instruments:
</FONT>

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    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="31"><FONT size="1"><B>Interest Rate Sensitivity &#150; Principal (Notional) Amount by Expected Maturity &#150;</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="31"><FONT size="1"><B>Average Interest Rate</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="31"><FONT size="1"><B>(in millions of U.S. dollars)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="31"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="31"><FONT size="1"><B>As of December 31, 2002</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="31"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="31"><FONT size="1"><B>Expected Maturity Date</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="31"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Fair</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2004</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2005</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2006</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2007</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Thereafter</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Value</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">LIABILITIES:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Short-term debt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fixed rate, denominated in U.S. dollars</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">96.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">96.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">96.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">144</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="31"><FONT size="1"><B>Interest Rate Sensitivity &#150; Principal (Notional) Amount by Expected Maturity &#150;</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="31"><FONT size="1"><B>Average Interest Rate</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="31"><FONT size="1"><B>(in millions of U.S. dollars)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="31"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="31"><FONT size="1"><B>As of December 31, 2002</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="31"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="31"><FONT size="1"><B>Expected Maturity Date</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="31"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Fair</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2004</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2005</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2006</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2007</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Thereafter</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Value</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average interest rate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fixed rate, denominated in Brazilian <I>reais</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">29.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">29.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">29.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average interest rate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">27.5</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">27.5</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Variable rate, denominated in Brazilian <I>reais</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">169.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">169.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">169.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average interest rate (of CDI)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">106.8</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">106.8</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Variable rate, denominated in Brazilian <I>reais</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average interest rate (over TJLP)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.9</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.9</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total Short-term debt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">303.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">303.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">303.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Long-term debt, including
current portion:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fixed rate, denominated in U.S. dollars</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">220.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">150.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">400.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">782.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">782.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average interest rate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.8</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.4</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.5</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.5</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.9</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.3</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Variable rate, denominated in U.S. dollars</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">150.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">176.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">137.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">68.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">535.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">535.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average interest rate (over LIBOR 6M)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.9</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.9</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.1</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.5</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.9</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Variable rate, denominated in Brazilian <I>reais</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">57.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">108.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">108.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average interest rate (over TJLP)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.9</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.9</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.8</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.9</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.5</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.9</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Variable rate, denominated in Brazilian <I>reais</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">34.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">34.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average interest rate (over IGP-M)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.3</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.5</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.5</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.8</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other variable rate, denominated in
Brazilian <I>reais</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total Long-term debt, including current
portion (excluding debentures)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">413.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">363.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">158.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">131.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">405.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,471.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,471.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Debentures, including current portion</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Variable rate, denominated in Brazilian <I>reais</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">60.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">63.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">63.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average interest rate (over IGP-M)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.3</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.3</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.9</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Variable rate, denominated in Brazilian <I>reais</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">93.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average interest rate (of CDI)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">118.3</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">118.3</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">118.3</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Variable rate, denominated in Brazilian <I>reais</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">182.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">182.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">182.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average interest rate (over TJLP)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total Debentures, including current portion</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">154.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">182.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">345.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">345.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ASSETS:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Short-term and Long-term investments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fixed rate, denominated in U.S. dollars</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">136.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">28.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">165.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">165.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average interest rate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.8</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.5</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.6</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Variable rate, denominated in Brazilian <I>reais</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average interest rate (of CDI)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">99</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">99</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total Short-term and Long-term investments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">138.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">28.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">166.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">166.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">145</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left"><FONT size="2"><B>Foreign Currency Exchange Rate Risk</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Braskem uses the Brazilian <I>real </I>as its functional currency. Its
liabilities that are exposed to foreign currency exchange rate risk are
denominated in U.S. dollars. To partially offset its risk of devaluation of the
Brazilian currency against the dollar, Braskem maintains several derivative
contracts. Because the Company borrows in the international markets to support
its operations and investments, it is exposed to market risks from changes in
foreign exchange and interest rates. Export sales, which generate receivables
payable in U.S. dollars, do not cover all of the Company&#146;s U.S. dollar
liabilities.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From March 1995 through January 1999, the <I>real </I>gradually devalued against
the U.S. dollar. In January 1999, the Central Bank abolished the band system
and allowed the <I>real</I>/U.S. dollar exchange rate to float freely. Since then,
the <I>real</I>/U.S. dollar exchange rate has been established mainly by the interbank
market and has fluctuated considerably. From December&nbsp;31, 1998
through April&nbsp;30, 2003, the U.S.&nbsp;dollar appreciated by approximately 139.1%
against the <I>real</I>.
The Central Bank has only intervened occasionally to control unstable
movements in the foreign exchange rate. The Company cannot predict, however,
whether the Central Bank will continue to let the <I>real </I>float freely, or if in
the future, the <I>real </I>will remain at its present level or devalue further.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
table below provides information about the Company&#146;s significant
foreign currency exposure:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="31"><FONT size="1"><B>Foreign Currency Exchange Rate Sensitivity &#150; Principal (Notional) Amount by</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="31"><FONT size="1"><B>Expected Maturity</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="31"><FONT size="1"><B>(in millions of U.S. dollars)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="31"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="31"><FONT size="1"><B>As of December 31, 2002</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="31"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="31"><FONT size="1"><B>Expected Maturity Date</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="31"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Fair</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2004</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2005</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2006</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2007</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Thereafter</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Value</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">LIABILITIES:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Short-term debt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Denominated in U.S. dollars</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">96.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">96.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">96.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Denominated in Brazilian <I>reais</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">206.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">206.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">206.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total Short-term debt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">303.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">303.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">303.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Long-term debt, including
current portion (excluding Debentures):</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Denominated in U.S. dollars</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">370.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">327.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">142.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">73.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">404.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,317.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,317.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Denominated in Brazilian <I>reais</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">42.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">36.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">58.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">154.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">154.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total Long-term debt, including current portion
(excluding Debentures)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">413.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">363.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">158.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">131.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">405.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,471.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,471.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Debentures, including current portion
Denominated in Brazilian <I>reais</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">154.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">182.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">345.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">345.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total Debentures, including current portion</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">154.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">182.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">345.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">345.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ASSETS:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Short-term and Long-term investments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Denominated in U.S. dollars</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">136.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">28.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">165.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">165.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Denominated in Brazilian <I>reais</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
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    <TD><HR size="1" noshade></TD>
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    <TD><HR size="1" noshade></TD>
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    <TD><HR size="1" noshade></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD><HR size="1" noshade></TD>
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    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total Short-term and Long-term investments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">138.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">28.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">166.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">166.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
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</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2">146</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
\
<P align="left"><FONT size="2">The table below provides information
about the Company&#146;s derivative instruments:
</FONT>


<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="90%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="27%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
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    <TD width="3%">&nbsp;</TD>
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    <TD width="3%">&nbsp;</TD>
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    <TD width="3%">&nbsp;</TD>
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    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
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    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="31"><FONT size="1"><B>As of December 31, 2002</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
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</TR>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="31"><FONT size="1"><B>Expected Maturity Date</B></FONT></TD>
</TR>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
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</TR>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Fair</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2004</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2005</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2006</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2007</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Thereafter</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Value</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
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    <TD colspan="3"><HR size="1" noshade></TD>
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    <TD colspan="3"><HR size="1" noshade></TD>
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    <TD colspan="3"><HR size="1" noshade></TD>
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    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cross currency and interest rate swaps
contracts</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">(notional amounts)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">U.S. dollars to <I>reais</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average receiving rate in U.S. dollar</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.4</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.4</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average paying rate in <I>reais </I>(% of CDI)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">103.8</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">103.8</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest rate swaps contracts</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Variable to fixed (U.S.$)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">121.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">135.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1.5</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average receiving rate (LIBOR 6M)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" nowrap align="center"><FONT size="2">LIBOR&#043;0%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" nowrap align="center"><FONT size="2">LIBOR&#043;0%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">LIBOR&#043;0%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average paying rate (U.S.$)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.82</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.87</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.83</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Foreign currency option</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Purchased U.S.$ put options</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">47.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">47.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average strike prices (R$ to U.S.$1.00)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Sold U.S.$ put options</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">75.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">75.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.3</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average strike prices (R$ to U.S.$1.00)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Purchased U.S.$ call options</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">28.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">28.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average strike prices (R$ to U.S.$1.00)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Sold U.S.$ call options</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">31.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">31.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(4.7</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average strike prices (R$ to U.S.$1.00)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company&#146;s foreign currency exposure gives rise to market risks
associated with exchange rate movements against the U.S. dollar. Foreign
currency-denominated liabilities at December&nbsp;31, 2002 consisted of debt
denominated in U.S. dollars. The Company&#146;s foreign currency exposure
(short-term debt and long-term debt, including the current portion) was
U.S.$1,414.6&nbsp;million at December&nbsp;31, 2002 compared to U.S.$1,583.9&nbsp;million at
December&nbsp;31, 2001. This foreign currency exposure is represented by debt in
the form of notes, pre-export finance facilities and working capital loans. The
Company&#146;s derivative instruments partially protect exposure arising from the
U.S. dollar-denominated debt.
</FONT>
<P align="left"><FONT size="2"><B>Commodity Prices</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although the majority of the Company&#146;s revenues are in <I>reais</I>, the Company
does not currently hedge its exposure to changes in the prices of
naphtha, its principal
raw material (which are linked to ARA quotations and the U.S. dollar-<I>real</I>
exchange rate), in part because a portion of its sales in 2002 were
exports payable in foreign currencies and the prices of its polyethylene,
polypropylene and PVC products generally reflect changes in the international
market prices of these products. In periods of high volatility in the U.S.
dollar-<I>real </I>exchange rate, there is usually a lag between the time that the
U.S. dollar appreciates and the time that the Company can effectively pass on
such increased cost in <I>reais </I>to its customers in Brazil. Accordingly, if the
<I>real </I>depreciates precipitously against the U.S. dollar in the future, the
Company may not immediately be able to pass on all of the corresponding
increases in its naphtha costs to its customers in Brazil, which could
materially adversely affect its results of operations and financial condition.
See &#147;Item&nbsp;3. Key Information&#151;Risk Factors-Risks Relating to the Company&#151;The
Company may be adversely affected by high naphtha costs.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
discussion regarding Braskem&#146;s risk management activities
includes &#147;forward looking statements&#148; that involve risks and uncertainties. Actual
results could differ materially from those projected due to actual developments
in the global financial markets. The methods used by Braskem to analyze risks
discussed above should not be considered projections of future events or
losses. See &#147;Cautionary Statement with Respect to Forward-Looking Statements.&#148;
Braskem also faces risks that are either nonfinancial or nonquantifiable. Such
risks principally include country risk and legal risk, and are not represented
in the above analyses.
</FONT>



<P align="center"><FONT size="2">147</FONT>




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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link2 "ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES" -->
<DIV align="left"><A NAME="012"></A></DIV>
<P align="left"><FONT size="2"><B>ITEM 12. </B>&nbsp;&nbsp;&nbsp;&nbsp;<B>DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</FONT>
<P align="center"><FONT size="2">148</FONT>
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<!-- link1 "PART II" -->
<DIV align="left"><A NAME="013"></A></DIV>
<P align="center"><FONT size="2"><B>PART II</B>
</FONT>

<!-- link2 "ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES" -->
<DIV align="left"><A NAME="014"></A></DIV>
<P align="left"><FONT size="2"><B>ITEM 13. </B>&nbsp;&nbsp;&nbsp;&nbsp;<B>DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</FONT>
<!-- link2 "ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS" -->
<DIV align="left"><A NAME="015"></A></DIV>
<P align="left"><FONT size="2"><B>ITEM 14. </B>&nbsp;&nbsp;&nbsp;&nbsp;<B>MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During September 2002, the Company modified its bylaws in order to include
a tag-along right for all of the Company&#146;s shareholders, including its
non-voting preferred shareholders. The Company&#146;s bylaws provide that if the
controlling shareholder(s) sell(s), assign(s), or otherwise transfer(s) control
of the Company at any time, the acquiring party(ies) must agree in writing to
make a public tender offer for the&nbsp;remaining shares of the Company at the same
price per share paid to the controlling shareholder(s). The public tender
offer must be conducted&nbsp;within 30&nbsp;days of the closing of the sale, assignment
or transfer to the acquiring party(ies) of the shares owned by the controlling
shareholder(s).
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The acquiring party(ies) may disregard the tag-along rights of Braskem&#146;s
minority shareholders only if the transfer of control of the Company occurs as
the result of a court ruling or of a final decision by a Brazilian regulatory
authority, including, without limitation, CADE, that requires the controlling
shareholder(s) of the Company to sell, transfer or exchange all or part of
their shares in the Company.
</FONT>
<!-- link2 "ITEM 15. CONTROLS AND PROCEDURES" -->
<DIV align="left"><A NAME="016"></A></DIV>
<P align="left"><FONT size="2"><B>ITEM 15. </B>&nbsp;&nbsp;&nbsp;&nbsp; <B>CONTROLS AND PROCEDURES</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has established disclosure controls and procedures to ensure
that material information relating to the Company, including its consolidated
subsidiaries, is made known to the officers who certify the Company&#146;s financial
reports and to other members of the Company&#146;s senior management and the Board
of Directors.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Within the 90&nbsp;days prior to the date of filing this Annual Report on Form
20-F, the Company, under the supervision and with the participation of its
management, including its Chief Executive Officer and its Chief Financial
Officer, evaluated the effectiveness of the design and operation of the
Company&#146;s &#147;disclosure controls and procedures&#148; (as defined in Rules&nbsp;13a-14(c)
and 15d-14(c) under the Exchange Act). Based upon this evaluation, the Chief
Executive Officer and the Chief Financial Officer concluded that the Company&#146;s
disclosure controls and procedures are effective to ensure that the information
required to be disclosed by the Company (including its consolidated
subsidiaries) in reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the Commission&#146;s rules and forms. The Company has investments in certain
unconsolidated entities. As the Company does not control or manage these
entities, its disclosure controls and procedures with respect to such entities
are necessarily substantially more limited than those it maintains with respect
to its consolidated subsidiaries.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In designing and evaluating the Company&#146;s disclosure controls and
procedures, the Company&#146;s management, including its Chief Executive Officer and
its Chief Financial Officer, recognized that any controls and procedures, no
matter how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives, and the Company&#146;s management
necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures. Because of the inherent
limitations in all control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any,
within the Company have been detected.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There have been no significant changes in the Company&#146;s internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of their most recent evaluation, nor were any corrective
actions required with regard to significant deficiencies and material
weaknesses in the Company&#146;s internal controls.
</FONT>
<P align="center"><FONT size="2">149</FONT>
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<!-- link2 "ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT" -->
<DIV align="left"><A NAME="017"></A></DIV>
<P align="left"><FONT size="2"><B>ITEM 16A. </B>&nbsp;&nbsp;&nbsp;<B>AUDIT COMMITTEE FINANCIAL EXPERT</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company notes that pursuant to Exchange Act Release No.&nbsp;34-47235, the
Company is not required to comply with Item&nbsp;16A of Form&nbsp;20-F until the Company
files its annual report for the fiscal year ending on or after July&nbsp;15, 2003.
The Company is currently evaluating its compliance with the requirements of
Item&nbsp;16A and expects that it will be able to make the disclosures required by
Item&nbsp;16A not later than the date on which the Company files its annual report
for the fiscal year ending on or after July&nbsp;15, 2003.
</FONT>
<!-- link2 "ITEM 16B. CODE OF ETHICS" -->
<DIV align="left"><A NAME="018"></A></DIV>
<P align="left"><FONT size="2"><B>ITEM 16B. </B>&nbsp;&nbsp;&nbsp;<B>CODE OF ETHICS</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company has adopted a code of ethics that applies to members of its Board of
Directors, Fiscal Council and Board of Executive Officers, as well as to its other employees,
and is posted on the Company&#146;s website at http://www.braskem.com.br. None of
the information on the Company&#146;s website is incorporated into or otherwise made part of
this annual report on Form&nbsp;20-F.
</FONT>
<P align="center"><FONT size="2">150</FONT>
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<!-- link1 "PART III" -->
<DIV align="left"><A NAME="019"></A></DIV>
<P align="center"><FONT size="2"><B>PART III</B>
</FONT>

<!-- link2 "ITEM 17. FINANCIAL STATEMENTS" -->
<DIV align="left"><A NAME="020"></A></DIV>
<P align="left"><FONT size="2"><B>ITEM 17. </B>&nbsp;&nbsp;&nbsp;&nbsp;<B>FINANCIAL STATEMENTS</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has responded to Item&nbsp;18 in lieu of responding to this item.
</FONT>
<!-- link2 "ITEM 18. FINANCIAL STATEMENTS" -->
<DIV align="left"><A NAME="021"></A></DIV>
<P align="left"><FONT size="2"><B>ITEM 18. </B>&nbsp;&nbsp;&nbsp;&nbsp;<B>FINANCIAL STATEMENTS</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reference is made to Item&nbsp;19 for a list of all financial statements filed as part of this Registration Statement.
</FONT>
<!-- link2 "ITEM 19. EXHIBITS" -->
<DIV align="left"><A NAME="022"></A></DIV>
<P align="left"><FONT size="2"><B>ITEM 19. </B>&nbsp;&nbsp;&nbsp;&nbsp;<B>EXHIBITS</B>
</FONT>
<P align="left"><FONT size="2">(a) <I>Financial Statements</I>
</FONT>

<P align="left"><FONT size="2">Financial Statements of Braskem S.A.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="94%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Report of PricewaterhouseCoopers Auditores Independentes</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
F-2</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Report of Deloitte Touche Tohmatsu</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
F-4</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Consolidated Balance Sheets as of December&nbsp;31, 2002 and 2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
F-6</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Consolidated Statements of Operations for the years ended December&nbsp;31, 2002, 2001 and 2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
F-8</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Consolidated Statements of Changes in Shareholders&#146; Equity for the years ended
December&nbsp;31, 2002, 2001 and 2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
F-9</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Consolidated Statements of Cash Flows for the years ended December&nbsp;31, 2002, 2001 and 2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">
F-12</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Notes to the Consolidated Financial Statements</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
F-14</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>
<P align="center"><FONT size="2">151</FONT>

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<P align="left"><FONT size="2">(b) <I>List of Exhibits</I>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="92%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">1.01</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Bylaws, as amended on April&nbsp;29, 2003.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">2.01</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Deposit Agreement, dated as of November&nbsp;24, 1998, among the Company,
Citibank, N.A. and all holders and beneficial owners of ADSs evidenced by
ADRs issued thereunder.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">2.02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
The total amount of long-term debt securities of the Company and its
subsidiaries under any one instrument does not exceed 10% of the total
assets of the Company and its subsidiaries on a consolidated basis. The
Company agrees to furnish copies of any or all such instruments to the
Commission upon request.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">3.01</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Shareholders Agreement, dated as of July&nbsp;27, 2001, between Odebrecht
Qu&#237;mica and Petroqu&#237;mica da Bahia S.A. (English translation)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">3.02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
First Amendment to Shareholders Agreement, dated as of July&nbsp;29, 2002,
between Odebrecht Qu&#237;mica and Petroqu&#237;mica da Bahia S.A. (English
translation)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">3.03</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Memorandum of Understanding Regarding Shareholders Agreement, dated as of
July&nbsp;3, 2001, among Odebrecht Qu&#237;mica S.A., Petroqu&#237;mica da Bahia S.A. and
Petrobras Qu&#237;mica S.A. (English translation)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">3.04</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
First Amendment to Memorandum of Understanding Regarding Shareholders
Agreement, dated July&nbsp;26, 2002, among Odebrecht S.A and Petrobras Qu&#237;mica
S.A., acknowledged by Petroqu&#237;mica da Bahia S.A., Nordeste Qu&#237;mica S.A.
and the Company. (English translation)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">3.05</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Memorandum of Understandings Regarding Shareholders Agreement, dated July
20, 2001, among Odebrecht Qu&#237;mica S.A., Petroqu&#237;mica da Bahia S.A.,
Petros&#151;Funda&#231;&#227;o Petrobras de Seguridade Social and Previ&#151;Caixa de
Previd&#234;ncia dos Funcion&#225;rios do Banco do Brasil. (English translation)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">4.01</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Naphtha and Gas Oil Purchase and Sale Contract, dated as of June&nbsp;22,
1978, between Petr&#243;leo Brasileiro S.A. and the Company (incorporated by
reference to Exhibit&nbsp;3.04 to Form&nbsp;20-FR of Copene Petroqu&#237;mica do Nordeste
S.A. filed on September&nbsp;30, 1998).</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">4.02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
First Amendment to Naphtha and Gas Oil Purchase and Sale Contract, dated
as of February&nbsp;8, 1993, to Naphtha and Gas Oil Purchase and Sale Contract
between Petr&#243;leo Brasileiro S.A. and the Company (incorporated by
reference to Exhibit&nbsp;3.05 to Form&nbsp;20-FR of Copene Petroqu&#237;mica do Nordeste
S.A. filed on September&nbsp;30, 1998).</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">4.03</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Second Amendment to Naphtha and Gas Oil Purchase and Sale Contract, dated
as of February&nbsp;24, 2003, between Petr&#243;leo Brasileiro S.A. and the Company.
(English translation)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">4.04</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Protocol and Justification of the Operation of Incorporation of OPP
Produtos Petroqu&#237;micos S.A. by the Company, dated July&nbsp;26, 2002. (English
translation)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">4.05</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Protocol and Justification of the Operation of Incorporation of 52114
Participa&#231;&#245;es S.A. by the Company, dated July&nbsp;26, 2002. (English
translation)</FONT></TD>
</TR>

<TR valign="bottom">

    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">4.06</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Protocol and Justification of the Operation of Incorporation of
Nitrocarbono S.A. by the Company, dated March&nbsp;10, 2003. (English
translation)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">6.01</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Statement regarding computation of earnings per share.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">8.01</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
List of subsidiaries.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">152</FONT>
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<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="92%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">10.01</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Certification of Principal Executive Officer, dated June&nbsp;30, 2003
pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of
2002.<SUP>1</SUP></FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">10.02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Certification of Principal Financial Officer, dated June&nbsp;30, 2003
pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of
2002.<SUP>1</SUP></FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><HR align="left" size="1" width="18%" noshade>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>1</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">A signed original of this written statement required by Section&nbsp;906 of
the Sarbanes-Oxley Act of 2002 has been provided by Braskem S.A. and will
be retained by Braskem S.A. and furnished to the Securities and Exchange
Commission or its staff upon request.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">153</FONT>
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<!-- link1 "SIGNATURES" -->
<DIV align="left"><A NAME="023"></A></DIV>
<P align="center"><FONT size="2"><B>SIGNATURES</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The registrant hereby certifies that it meets all of the requirements for
filing on Form&nbsp;20-F and that it has duly caused and authorized the undersigned
to sign this annual report to be signed on its behalf.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Date: June&nbsp;30, 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
BRASKEM S.A.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
/s/Jos&#233; Carlos Grubisich Filho</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
<HR size="1" noshade></FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Jos&#233; Carlos Grubisich Filho</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Chief Executive Officer</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">154</FONT>
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<P align="center"><FONT size="2"><B>SECTION 302 CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER</B>
</FONT>

<P align="left"><FONT size="2">I, Jos&#233; Carlos Grubisich Filho, Chief Executive Officer of Braskem, certify
that:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">1.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">I have reviewed this annual report on Form&nbsp;20-F of Braskem S.A.;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">2.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">3.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">4.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The registrant&#146;s other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules&nbsp;13a-14 and 15d-14) for the registrant and
have:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%" align="left" nowrap><FONT size="2">a.</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%" align="left" nowrap><FONT size="2">b.</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">evaluated the effectiveness of the registrant&#146;s disclosure controls
and procedures as of a date within 90&nbsp;days prior to the filing date of
this annual report (the &#147;Evaluation Date&#148;); and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%" align="left" nowrap><FONT size="2">c.</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">5.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The registrant&#146;s other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant&#146;s auditors and the audit
committee of registrant&#146;s board of directors (or persons performing the
equivalent function):</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%" align="left" nowrap><FONT size="2">a.</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant&#146;s ability to
record, process, summarize and report financial data and have
identified for the registrant&#146;s auditors any material weaknesses in
internal controls; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%" align="left" nowrap><FONT size="2">b.</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant&#146;s
internal controls; and</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">6.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The registrant&#146;s other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="80%">
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Date: June&nbsp;30, 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
/s/Jos&#233; Carlos Grubisich Filho</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
<HR width="50%" size="1" noshade></FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Jos&#233; Carlos Grubisich Filho</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Chief Executive Officer</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">155</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2"><B>SECTION 302 CERTIFICATIONS OF CHIEF FINANCIAL OFFICER</B>
</FONT>

<P align="left"><FONT size="2">I, Paul Elie Altit, Chief Financial Officer of Braskem S.A., certify that:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">1.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">I have reviewed this annual report on Form&nbsp;20-F of Braskem S.A.;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">2.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">3.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">4.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The registrant&#146;s other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules&nbsp;13a-14 and 15d-14) for the registrant and
have:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">a.</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">b.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">evaluated the effectiveness of the registrant&#146;s disclosure controls
and procedures as of a date within 90&nbsp;days prior to the filing date of
this annual report (the &#147;Evaluation Date&#148;); and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">c.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">5.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The registrant&#146;s other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant&#146;s auditors and the audit
committee of registrant&#146;s board of directors (or persons performing the
equivalent function):</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">a.</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant&#146;s ability to
record, process, summarize and report financial data and have
identified for the registrant&#146;s auditors any material weaknesses in
internal controls; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%" align="left" nowrap><FONT size="2">b.</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant&#146;s
internal controls; and</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">6.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The registrant&#146;s other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="80%">
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Date: June&nbsp;30, 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
/s/Paul Elie Altit</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
<HR width="40%" size="1" noshade></FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Paul Elie Altit</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Chief Financial Officer</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">156</FONT>



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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.<br>
Consolidated financial statements<br>
for the years ended December 31, 2002, 2001 and 2000<br>
and Report of Independent Accountants</B></FONT></TD>
</TR>
</TABLE>

<P align="center"><FONT size="2">F-1</FONT>

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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Report of Independent Accountants</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">To the Board of Directors and Shareholders<br>
Braskem S.A.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">1</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">We have audited the accompanying consolidated balance sheet of Braskem
S.A. and its subsidiaries as of December&nbsp;31, 2002 and the related
consolidated statements of operations, of changes in shareholders&#146; equity
and of cash flows for the year then ended. These financial statements are
the responsibility of the Company&#146;s management. Our responsibility is to
express an opinion on these financial statements based on our audits.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">2</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">3</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Braskem S.A. and its subsidiaries at December&nbsp;31, 2002 and the results of
their operations and their cash flows for the year then ended, in
conformity with accounting principles generally accepted in the United
States of America.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">4</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">We previously audited and reported on the consolidated balance sheet of
OPP Produtos Petroqu&#237;micos S.A. and subsidiaries as of December&nbsp;31, 2001
and the related consolidated statements of operations and of cash flows
for the period from July&nbsp;25 to December&nbsp;31, 2001, prior to their
restatement for the 2002 merger with Braskem S.A., which was accounted for
in a manner similar to a pooling of interests. The contribution of OPP
Produtos Petroqu&#237;micos S.A. and subsidiaries to net sales and loss
represented 26&nbsp;percent and 74&nbsp;percent of the respective restated totals.
Separate financial statements of the other companies included in the 2001
restated consolidated balance sheet and statements of operations and of
cash flows were audited and reported on separately by other auditors. We
also audited the combination of the accompanying consolidated balance
sheet and statements of operations and of cash flows for the year ended
December&nbsp;31, 2001, after restatement for the merger of OPP Produtos
Petroqu&#237;micos S.A. with Braskem S.A.; in our opinion, such consolidated
statements have been properly combined on the basis described in Note
20(a)
of the notes to consolidated financial statements.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-2</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">5</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">As discussed in Note 2(s) to the consolidated financial statements, the
Company discontinued the amortization of goodwill in 2002, in connection
with the implementation of Statement of Financial Accounting
Standards No.&nbsp;142, &#147;Goodwill and Other Intangible Assets.&#148;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">6</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">As described in Note 5 to the consolidated financial statements, the
indirect subsidiary OPP Qu&#237;mica S.A., based on the decision of the
Brazilian Supreme Court, recorded an excise tax gain of US$284,509,000 in
results for the year ended December&nbsp;31, 2002.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">7</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">As described in Notes 11(e) and 13(b) to the consolidated financial
statements, the Company and certain subsidiaries are involved in
significant legal proceedings involving exemption from the Brazilian
Social Contribution tax and a wage and salary adjustment clause in a
collective labor agreement with the chemical workers union in the state of
Bahia. Based on the opinions of legal counsel and management that losses
in these cases are not probable, no provision for losses has been
established for these proceedings.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">8</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">As described in Note 1 to the consolidated financial statements, the
Company has been involved in a broad corporate reorganization process, as
part of the overall reorganization of the Brazilian petrochemical
industry. The Company and its subsidiaries may undergo further significant
economic and/or corporate changes during this process.</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="60%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">PricewaterhouseCoopers</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Salvador, Brazil</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Auditores Independentes</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
June&nbsp;20, 2003</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-3</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>



<!-- link1 "INDEPENDENT AUDITORS&#146; REPORT" -->
<DIV align="left"><A NAME="024"></A></DIV>

<P align="left"><FONT size="2"><B>INDEPENDENT AUDITORS&#146; REPORT</B>
</FONT>

<P align="left"><FONT size="2">To the shareholders of Braskem S.A. (formerly Copene &#151; Petroqu&#237;mica do Nordeste
S.A.)
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">1.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">We have audited the balance sheet of Copene &#151; Petroqu&#237;mica do Nordeste
S.A. and subsidiaries (the &#147;Company&#148;) as of December&nbsp;31, 2001, and the
related statements of income, stockholders&#146; equity, and cash flows for
each of the two years then ended. The financial statements as of December
31, 2001 and for the year then ended are not presented herein. These
financial statements are the responsibility of the Company&#146;s management.
Our responsibility is to express an opinion on the financial statements
based on our audits.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">2.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">3.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Copene
- Petroqu&#237;mica do Nordeste S.A. and subsidiaries as of December&nbsp;31, 2001,
and the results of their operations and their cash flows for the two years
in the period ended December&nbsp;31, 2001 in conformity with accounting
principles generally accepted in the United States of America.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">4.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">As mentioned in Note 11(e), the Company is discussing the
unconstitutionality of the Social Contribution Tax on profits with Federal
Tax Authorities at the Brazilian Supreme Court.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-4</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">5.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">As discussed in Note 20(b), the accompanying financial statements as of
December&nbsp;31, 2001 and for the year then ended have been restated to record
the portions of the Northeast Assets that were purchased by the Company
from the Odebrecht Group at their carry over basis.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">Deloitte Touche Tohmatsu<BR>
Auditores Independentes
</FONT>
<P align="left"><FONT size="2">Salvador, Brazil<br>
June&nbsp;3, 2002 (except for the restatement described in Note 20(b), for which the
date is June&nbsp;20, 2003)
</FONT>

<P align="center"><FONT size="2">F-5</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="100%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>Braskem S.A. </B><br><br><B>Consolidated balance sheet</B><br><B>Expressed in thousands of U.S. dollars</B><br><HR size="1" noshade></FONT></TD>
</TR>
</TABLE>
</CENTER>


<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="55%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD nowrap colspan="2"><FONT size="2"><B>Assets</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Note</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center" colspan="2"><FONT size="1"><B>&nbsp;</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Current assets</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash and cash equivalents</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35,516</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">109,161</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Short-term investments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">137,960</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">38,713</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Trade accounts receivable, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">239,710</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">205,544</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Receivables from related parties</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">615</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">95,909</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Taxes recoverable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">182,699</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">90,685</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Insurance claims receivable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18,690</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Inventories</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">230,603</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">268,822</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Prepaid expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">36,032</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">37,770</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Prepayment of financing</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">27,854</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15,834</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">44,148</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">906,830</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">909,442</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Investments</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">250,518</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">404,442</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Goodwill, net</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1</FONT></TD>
    <TD nowrap><FONT size="2">(c-iii)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">120,084</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">184,887</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Property, plant and equipment, net</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,183,651</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,758,554</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Other non-current assets</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Receivables from related parties</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,341</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20,854</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Intangible assets, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17,692</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22,490</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Deferred charges, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">47,302</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">41,024</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Restricted deposits for legal proceedings</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">37,456</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">28,416</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Deferred income tax, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11</FONT></TD>
    <TD nowrap><FONT size="2">(c)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">61,208</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">79,753</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Trade accounts receivable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,847</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15,953</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Taxes recoverable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">191,428</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">75,911</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Inventories, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22,553</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,248</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Prepaid expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19,622</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">26,575</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Long-term investments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">28,825</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">64,954</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Advances to suppliers</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">823</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">21,995</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Prepayment of financing</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25,882</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,892</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">39,748</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">473,871</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">445,921</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,934,954</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,703,246</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-6</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="75%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>Braskem S.A. </B><br><br></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>Consolidated balance sheet</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>Expressed in thousands of U.S. dollars</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
<B>(continued)</B></FONT></TD>
</TR>
<TR>
    <TD colspan="3" valign="top" align="left"><HR size="1" noshade></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD nowrap colspan="3"><FONT size="2"><B>Liabilities and shareholders' equity</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Note</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>

<TR valign="bottom">
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>&nbsp;</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Current liabilities</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Suppliers</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">452,335</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">248,912</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Payroll and related charges</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22,709</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">57,733</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fair market value of derivative financial instruments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,370</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12,542</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income tax and social contribution</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,582</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">53</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other taxes</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">110,893</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">21,033</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Short-term debt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">303,074</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">249,894</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Debentures</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,071</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11,308</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Current portion of long-term debt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">413,039</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">578,776</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Dividends and interest on own capital payable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">761</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Related parties</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">75,173</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">300,257</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Advances from customers and current rights</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">78,039</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">28,488</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">39,161</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,501,534</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,519,669</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Long-term liabilities</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Long-term debt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,058,724</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,216,047</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Debentures</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">336,859</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">204,118</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Related parties</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,863</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16,522</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Minimum pension liability</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,502</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Taxes and contributions payable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">209,375</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">194,869</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Deferred income taxes</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16,914</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">23,766</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">51,966</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,194</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,686,203</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,664,516</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Commitments and contingencies</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Minority interest</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">109,602</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">323,612</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Shareholders&#146; equity (deficit)</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Share capital</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Preferred shares - no par value<br>
3,264,000 thousand shares authorized; class A shares -<br>
2,160,764 thousand issued and 2,106, 144 thousand outstanding at<br>
December&nbsp;31,2002 (2001 - 1,134,265 thousand issued and 1,079,645<br>
thousand outstanding); class B shares - 11,458 thousand shares issued<br>
and outstanding at December&nbsp;31, 2002 and 2001</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">314,319</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">302,004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Common
shares - no par value<br>
1,836,000 thousand shares authorized;<br>
1,226,091 thousand shares issued and outstanding at December&nbsp;31, 2002,<br>
646,693 thousand shares issued and outstanding at December&nbsp;31, 2001</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">153,926</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">146,976</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Treasury shares - 54,620 class A preferred shares</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(15,412</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(15,412</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Unappropriated retained earnings</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(609,232</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">135,750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Appropriated retained earnings (statutory reserves)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">202,341</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">350,032</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cumulative other comprehensive loss</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(408,327</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(723,901</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(362,385</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">195,449</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,934,954</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,703,246</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2">The accompanying notes are an integral part of these consolidated financial statements.
</FONT>


<P align="center"><FONT size="2">F-7</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B><br><br></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Consolidated statement of operations<br>
Expressed in thousands of U.S. dollars, except earnings (losses)&nbsp;per thousand shares </B>&nbsp;<hr
size="1" noshade></FONT></TD>
</TR>
</TABLE>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="52%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Note</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Gross sales, net of allowances</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Domestic</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,411,127</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,060,136</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,718,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Export</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">536,375</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">198,752</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">167,665</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,947,502</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,258,888</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,886,165</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Sales and value-added tax</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(556,386</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(486,997</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(331,065</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Net sales</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,391,116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,771,891</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,555,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cost of sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,900,987</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,447,207</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,252,357</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Gross profit</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">490,129</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">324,684</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">302,743</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Selling, general and administrative expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(252,475</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(80,632</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(77,035</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Credit from Federal Excise Tax (IPI)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">284,509</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Operating income</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">522,163</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">244,052</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">225,708</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Non-operating income (expenses)</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Financial income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">167,854</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">80,448</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">94,869</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Financial expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,159,842</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(294,593</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(134,000</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(57,281</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(26,312</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,494</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Income (loss)&nbsp;before income tax, equity in results of affiliates,
minority interest and change in accounting principle</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(527,106</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,595</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">184,083</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income tax (expense)&nbsp;benefit</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Current</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(25,460</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13,872</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(303</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Deferred</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,038</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">460</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,634</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Income (loss)&nbsp;before equity in results of affiliates,
minority interest and change in accounting principle</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(547,528</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17,927</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">181,146</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Equity in earnings of affiliates, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22,467</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6,090</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,889</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Minority interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">65,024</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(63,848</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Income (loss)&nbsp;before change in accounting principle</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(460,037</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(52,011</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">188,050</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cumulative effect of a change in accounting principle,
net of income tax effect</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,767</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Net income (loss)&nbsp;for the year</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(460,037</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(50,244</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">188,050</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Basic and diluted earnings (losses)&nbsp;per thousand common shares</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income (loss)&nbsp;before income from change in accounting principle</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(383.74</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(59.00</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">106.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cumulative effect of a change in accounting principle</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Earnings (losses)&nbsp;per thousand common shares</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(383.74</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(57.00</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">106.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2">The accompanying notes are an integral part of these consolidated financial statements.
</FONT>


<P align="center"><FONT size="2">F-8</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="84%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>Braskem S.A.</B><br><br></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>Consolidated statement of changes in shareholders&#146; equity (deficit)</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>Expressed in thousands of shares and thousands of U.S. dollars, except per share amounts</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3" valign="top" align="left"><HR size="1" noshade></TD>
</TR>
</TABLE>
</CENTER>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="49%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="23"><FONT size="1"><B>Year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="23"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>US$</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>US$</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>US$</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Class&nbsp;A preferred shares</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">At beginning of the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,083,457</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">284,795</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,134,265</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">166,962</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,134,265</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">166,898</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Shares held in treasury</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">64</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Balance before merger</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,083,457</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">284,795</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,134,265</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">166,962</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,134,265</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">166,962</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Merger &#151; Braskem shares exchanged for 52114 and OPP PP (Note 1(c-v))</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">77,307</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12,315</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">949,192</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">117,833</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">At the end of the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,160,764</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">297,110</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,083,457</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">284,795</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,134,265</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">166,962</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Class&nbsp;B preferred shares</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">At beginning and end of the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11,458</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17,209</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11,458</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17,209</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11,458</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17,209</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Total preferred shares at the end of the year</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,172,222</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">314,319</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,094,915</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">302,004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,145,723</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">184,171</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Common shares</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">At beginning of the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,182,456</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">146,976</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">646,693</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">80,465</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">646,693</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">80,465</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Merger &#151; Braskem shares exchanged for 52114 and OPP PP (Note 1(c-v))</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">43,635</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,950</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">535,763</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">66,511</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">At the end of the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,226,091</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">153,926</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,182,456</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">146,976</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">646,693</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">80,465</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Preferred class A treasury shares acquired</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">At beginning of the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(54,620</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(15,412</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(54,620</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(15,412</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(55,520</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(15,665</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Disposal (acquisition)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">253</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">At the end of the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(54,620</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(15,412</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(54,620</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(15,412</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(54,620</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(15,412</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-9</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="84%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>Braskem S.A.</B><br><br></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>Consolidated statement of changes in shareholders&#146; equity (deficit)</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>Expressed in thousands of U.S. dollars, except per share amounts</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
<B>(continued)</B></FONT></TD>
</TR>
<TR>
    <TD colspan="3" valign="top" align="left"><HR size="1" noshade></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Appropriated retained earnings (statutory reserve)</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Legal reserve</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">At beginning of the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">42,098</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">49,956</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">48,241</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Transfer from (to)&nbsp;unappropriated retained earnings</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(42,098</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(7,858</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,715</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">At the end of the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">42,098</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">49,956</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Tax incentive reserve</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">At beginning of the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">307,934</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">350,593</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">342,183</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Transfer from (to)&nbsp;unappropriated retained earnings</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(105,593</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(42,659</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,410</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Total appropriated retained earnings at the end of the year</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">202,341</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">307,934</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">350,593</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">At the end of the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">202,341</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">350,032</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">400,549</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Unappropriated retained earnings</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">At the beginning of the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">135,750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,217,720</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,104,366</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net income (loss)&nbsp;for year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(460,037</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(50,244</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">188,050</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Dividends (per thousand shares):</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Preferred class A (2002 - US$2.15; 2001 - US$23.33; 2000 - US$37.31)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(4,539</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(25,183</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(40,241</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Preferred class B (2002 - US$4.20; 2001 - US$9.20; 2000 - US$28.30)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(48</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(105</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(325</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Common shares (2001 - US$21.45; 2000 - US$37.30)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(13,870</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(24,109</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Distributions to shareholders:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Acquisition of Northeast Assets (Note 1(c-ii))</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(149,367</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">OPP PP transaction (Note 1(c-v))</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(577,821</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Distributions by OPP PP</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(428,049</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(315,956</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Transfer from (to)&nbsp;reserves, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">147,691</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">50,517</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(10,125</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Reversal of dividends from previous year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">59</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">104</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">At the end of the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(609,232</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">135,750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,217,720</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-10</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="84%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>Braskem S.A.</B><br><br></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>Consolidated statement of changes in shareholders&#146; equity (deficit)</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>Expressed in thousands of U.S. dollars, except per share amounts</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
<B>(continued)</B></FONT></TD>
</TR>
<TR>
    <TD colspan="3" valign="top" align="left"><HR size="1" noshade></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Cumulative other comprehensive loss</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Translation adjustment</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">At beginning of the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(723,901</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(695,817</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(582,889</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net change in translation adjustment during the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">326,076</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(28,084</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(112,928</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">At the end of the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(397,825</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(723,901</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(695,817</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Minimum pension liability adjustment </B>(Note 12)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">At the end of the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(10,502</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">At the end of the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(408,327</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(723,901</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(695,817</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Comprehensive income (loss)&nbsp;for the year</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net income (loss)&nbsp;for the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(460,037</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(50,244</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">188,050</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Translation adjustment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">326,076</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(28,084</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(112,928</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Minimum pension liability adjustment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(10,502</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Comprehensive income (loss)</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(144,463</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(78,328</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">75,122</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2">The accompanying notes are an integral part of these consolidated financial statements.
</FONT>

<P align="center"><FONT size="2">F-11</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B><br><br></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Consolidated statement of cash flow<br>
Expressed in thousands of U.S. dollars</B>
<hr size="1" noshade></FONT></TD>
</TR>
</TABLE>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="54%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="14"><FONT size="1"><B>Year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="14"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD nowrap colspan="3"><FONT size="2"><B>Cash flows from operating activities</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>&nbsp;</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net income (loss)&nbsp;for the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(460,037</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(50,244</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">188,050</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Adjustments to reconcile net income (loss)&nbsp;to cash provided operating activities
by (used in) operating activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Depreciation</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">61,956</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">54,165</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">51,596</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Amortization of intangible and deferred charges</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17,222</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,376</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Amortization of goodwill and fair market value adjustments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,852</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,861</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,557</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Equity in loss (earnings)&nbsp;of affiliates</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(22,467</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,090</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6,889</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loss on disposal of property, plant and equipment, investments in affiliates</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">43,556</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(379</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Deferred tax expense (benefit)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(5,038</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(460</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,634</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Exchange and monetary variations, interest on related parties,
short and<BR>long-term debt, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">786,601</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,476</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(28,834</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Amortization of discount on BNDES loan</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(12,383</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Minority interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(65,024</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">63,848</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(15</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,574</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(259</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">368</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Decrease (increase)&nbsp;in assets:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Trade accounts receivable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(135,969</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">93,828</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(27,240</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Taxes recoverable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(315,903</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(54,900</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(5,979</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Inventories</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(77,265</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">590</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(20,059</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Deferred charges</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(30,534</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(23,182</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(9,204</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(33,696</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(12,321</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(9,798</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Increase (decrease)&nbsp;in liabilities:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Suppliers</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">391,567</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">47,942</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(5,022</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Payroll and related charges and other taxes</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">102,290</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6,259</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">135</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fair market value of derivative financial instruments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(11,829</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12,542</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income tax and social contribution</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,105</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(29,394</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accrued liability for legal proceedings, net of restricted deposits</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">51,890</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">56,711</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">23,136</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Advances from customers</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">77,584</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">32,185</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(41,498</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,175</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Net cash provided by operating activities</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">429,620</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">124,352</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">166,608</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Cash flows from investing activities</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Short and long term investments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(113,448</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">437,061</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(25,996</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Additions to property, plant and equipment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(115,464</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(146,275</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(58,426</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Additions to intangible assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(3,433</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">534</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Additions to investment in affiliate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6,376</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Additions to other investments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(13</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(590</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Proceeds from sale of investments, property, plant and equipment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,130</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">27,569</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18,230</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Acquisitions
of Northeast Assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(584,286</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>



<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash
and cash equivalents of acquired businesses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">147,620</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14,366</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(156</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">301</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Net cash used in investing activities</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(217,238</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(118,523</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(65,891</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-12</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="75%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>Braskem S.A.</B><br><br></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>Consolidated statements of cash flow</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>Expressed in thousand of U.S. dollars</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
<B>(continued)</B></FONT></TD>
</TR>
<TR>
    <TD colspan="3" valign="top" align="left"><HR size="1" noshade></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="56%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Cash flows from financing activities</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Short-term debt:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Issuances</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">675,856</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">636,697</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">53,816</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Repayments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,469,232</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(417,420</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(51,267</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Long-term debt:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Issuances</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">778,485</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">627,292</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">103,381</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Repayments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(500</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(593,571</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(168,874</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Advances to export distributor</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(31,386</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Related parties:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Issuances</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">246,987</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">227,586</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Repayments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(382,559</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(371,771</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Dividends paid to stockholders and minority interests</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(10,719</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(39,928</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(65,790</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Stock issue</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,140</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Proceeds from (payments of) swap contracts</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17,688</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(21,428</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Treasury shares sold (purchased)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">317</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,179</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,633</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Net cash provided by (used in) financing activities</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(191,107</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">91,206</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(149,845</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Effect of exchange rate changes on cash</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(94,920</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6,351</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(3,308</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Net increase (decrease)&nbsp;in cash and cash equivalents</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(73,645</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">90,687</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(52,436</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Cash and cash equivalents, beginning of the year</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">109,161</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18,474</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">70,910</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Cash and cash equivalents, end of the year</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35,516</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">109,161</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18,474</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Cash paid during the year for:</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest paid</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(274,841</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(174,370</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(66,132</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income tax</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(154</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(329</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2">The accompanying notes are an integral part of these consolidated financial statements.
</FONT>

<P align="center"><FONT size="2">F-13</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>1 Operations</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(a)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Braskem S.A. (&#147;Braskem&#148; or &#147;the Company&#148;) is a corporation organized
under the laws of Brazil for the purpose of manufacturing, trading,
importing and exporting chemical and petrochemical products and fuels, as
well as producing and supplying steam, water, compressed air and electric
power to companies operating in the Cama&#231;ari Petrochemical Complex in
Bahia, Brazil, and the rendering of services to those companies. Braskem
is the new corporate name of Copene Petroqu&#237;mica do Nordeste S.A.
(&#147;Copene&#148;). The current organizational structure of Braskem is the result
of one of the most significant corporate restructurings undertaken in
Brazil, integrating six major Brazilian petrochemical companies:
Copene;
OPP Qu&#237;mica S.A. (&#147;OPP Qu&#237;mica&#148;); Trikem S.A. (&#147;Trikem&#148;); Proppet S.A.
(&#147;Proppet&#148;); Nitrocarbono S.A. (&#147;Nitrocarbono&#148;) and Polialden Petroqu&#237;mica
S.A. (&#147;Polialden&#148;). Substantially all of Braskem&#146;s operations are located
in Brazil.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Braskem&#146;s business operations are organized into four business segments and are
managed on that basis:</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">I.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><B>Basic Petrochemicals </B>- manufacture of basic petrochemical products such
as ethylene, propylene, benzene, para-xylene, butadiene and others, the
manufacture of fuel such as automotive gasoline and the production of
utility products such as steam, demineralized water, compressed air and
electric energy for its own consumption and for sale to other companies in
the Cama&#231;ari Petrochemical Complex. This segment operates five industrial
units in Cama&#231;ari. This segment depends largely on the supply of naphtha
by Petr&#243;leo Brasileiro S.A. &#151; Petrobras.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">II.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><B>Polyolefins </B>- manufacture of polyethylene and polypropylene. This
segment operates four industrial units which produce polythylene
(two in Cama&#231;ari and two in the Southern Petrochemical Complex in
the Brazilian state of Rio Grande do Sul) and three industrial
units which produce polypropylene in the Southern Complex. This
segment&#146;s facilities in the Southern Petrochemical Complex depend
on the supply of raw materials by COPESUL &#151; Companhia
Petroqu&#237;mica do Sul (&#147;Copesul&#148;).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">III.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><B>Vinyls </B>- manufacture of caustic soda, chlorine, ethylene
dichloride (EDC)&nbsp;and polyvinylchloride (PVC). This segment
manufactures caustic soda and chlorine in two industrial units
(Cama&#231;ari and Macei&#243; in the Brazilian state of Alagoas), EDC in
one industrial unit (Macei&#243;) and PVC in three industrial units
(Cama&#231;ari, Marechal Deodoro in Alagoas, and S&#227;o Paulo).</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-14</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">IV.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><B>Business Development </B>- primarily the manufacture of dimethyl
terephthalate (DMT), polyester terephthalate (PET)&nbsp;resins, and
intermediary products including caprolactam, cyclohexane,
cylohexanone and ammonium sulfate. This segment operates two
plants in the Cama&#231;ari Complex.</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(b)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The Odebrecht and Mariani Groups, through Nova Cama&#231;ari Participa&#231;&#245;es
S.A. (&#147;Nova Cama&#231;ari&#148;), were winners of the auction of the so-called
Econ&#244;mico S.A. Empreendimentos (&#147;ESAE&#148;) Assets, held in the city of S&#227;o
Paulo on July&nbsp;25, 2001. As a result, on a combined basis, the Odebrecht
and Mariani Groups acquired a controlling interest of Nordeste Qu&#237;mica
S.A. (&#147;Norquisa&#148;), which, in turn, was the controlling shareholder of the
Company.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Additionally in July 2001, the Company acquired 100% share participation in
Copene Participa&#231;&#245;es S.A. (formerly known as Conepar &#151; Companhia Nordeste de
Participa&#231;&#245;es (&#147;Conepar&#148;)) which has 42.64% share participation in Polialden,
and 30.99% share participation in Politeno &#151; Ind&#250;stria e Com&#233;rcio S.A.
(&#147;Politeno&#148;). For further details, see Note 1(c-i).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Polialden&#146;s main objective is
to produce and sell high-density polyethylene,
while Politeno manufactures and sells low density polyethylene,
linear low-density polyethylene and high-density polyethylene. These companies are part of
the second generation companies of the Cama&#231;ari Petrochemical Complex.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In August 2002, Braskem issued new shares of stock to the Odebrecht and Mariani
Groups in exchange for their holdings in OPP Produtos Petroqu&#237;micos S.A. (&#147;OPP
PP&#148;) and 52114 Participa&#231;&#245;es S.A. (&#147;52114&#148;), respectively.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The principal assets of OPP PP included 81.3% of the capital stock and 100% of
the voting stock of OPP Qu&#237;mica, a manufacturer of polyethylene and
polypropylene. OPP Qu&#237;mica also held 36.3% of the capital stock and 65.9% of
the voting stock of Trikem, a manufacturer of caustic soda, chlorine, EDC and
PVC, and 29.5% of the capital stock and voting stock of Copesul, a company that
produces basic petrochemicals for the Southern Petrochemical Complex.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-15</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The principal asset of 52114 was
92.29% of the capital stock of Nitrocarbono, a manufacturer of caprolactam, ammonium sulfate and
caprolactam
by-products.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">For further details on the OPP PP
and 52114 acquisitions, see Note 1(c-v).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">As of December&nbsp;31, 2002, Braskem had negative working capital in the amount of
US$ 594,704 and shareholders&#146; deficit of <BR>US$ 328,833. The consolidated balance
sheet includes US$ 54,559 related to advances on export contracts and advances
from foreign customers that will be amortized with future exports.
Approximately 70% of Braskem&#146;s loans are indexed to the U.S. dollar exchange
rate, which closed at R$ 3.5333 on December&nbsp;31, 2002 but has since declined. To
reduce the demand for working capital, the Company&#146;s management plans to depend
on: 1) operating cash flows; 2) the extension of the payment dates of its main
supplier obligations; 3) new funding backed by export flows; and 4) the
extension of the maturity profile of its debts through new long-term
borrowings, including transactions in the negotiation phase.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(c)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Corporate restructuring</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(i)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Auction of ESAE assets</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The Odebrecht and Mariani Groups, through Nova Cama&#231;ari, were the winners of
the auction of the so-called ESAE Assets held in the city of S&#227;o Paulo on July
25, 2001. As a result, the Odebrecht and Mariani Groups acquired control of
Norquisa, which, in turn, was the Company&#146;s parent company.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In order to maximize the value of the ESAE Assets in the auction, the Brazilian
Central Bank, as Liquidator of Banco Econ&#244;mico (ESAE&#146;s controlling
shareholders), structured the so-called Protocol Group (Econ&#244;mico, Mariani and
Odebrecht Groups) to sell the ESAE Assets jointly with a block of assets of the
members of the Protocol Group, which included their respective shareholdings in
Norquisa. Before July 2001, the Brazilian Central Bank announced two auctions
for the sale of the package of shareholdings, in December 2000 and March 2001,
both of which were inconclusive.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-16</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
\
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The 3rd auction had as its objective the sale of 100% of the ESAE Assets for
the minimum price of R$ 785,000 thousand (equivalent to US$ 314,364). The
winner of the 3rd auction, upon buying ESAE, was obliged to respect the
tag-along rights of the remaining members of the Protocol Group and the
shareholders&#146; agreement of Copene Participa&#231;&#245;es S.A. As a result, under the
rules of the 3rd auction, Nova Cama&#231;ari acquired, through the exercise of the
tag-along right of sale, 31.92% and 11.76% of the capital of Copene
Participa&#231;&#245;es S.A., which was held indirectly by the Odebrecht and Mariani
Groups and by BNDES Participa&#231;&#245;es S.A. (&#147;BNDESPAR&#148;), respectively, and became
the holder of 100% of Copene Participa&#231;&#245;es&#146; capital. Furthermore, through the
exercise of the tag-along rights held by companies controlled by the Odebrecht
and Mariani Groups, Nova Cama&#231;ari acquired 100% of the capital of Proppet.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Copene Participa&#231;&#245;es, in turn, controls Polialden (66.67% of voting capital and
42.64% of total capital) and has a significant shareholding in Politeno (35% of
voting capital and 30.99% of total capital), both of which are
second-generation operational companies which produce thermoplastic resins.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(ii)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Acquisition of Nova Cama&#231;ari by the Company</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Based on the prior authorization by the Company&#146;s Board of Directors on July
24, 2001, the Company acquired Nova Cama&#231;ari after the 3rd auction for the
amount of US$ 40.00 (forty dollars). With this transaction, Braskem assumed
assets which Nova Cama&#231;ari had previously acquired in the context of the ESAE
Auction, as well as the respective liabilities, in the amount of US$ 573,463.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The amount paid for the acquisition of those investments is supported by the
economic and financial appraisal reports of independent experts.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The purchase of these assets
(&#147;Northeast Assets&#148;) by the Company was
pre-approved by the Board of Directors on July&nbsp;24, 2001. The terms of approval
stipulated that, after the Company acquired Nova Cama&#231;ari, a first class
investment bank would independently appraise the cost of Nova Cama&#231;ari for the
purposes of adjusting the price paid by the Company, if applicable. The
selected bank prepared its appraisal using the same projections of resin and
raw material prices and the same macroeconomic indicators underlying the
formulation of the discount rate used in the independent appraisals of Nova
Cama&#231;ari. The remaining assumptions and the methodology used to obtain the
discount rate were selected by the bank.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-17</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The result of this appraisal was compatible with the other appraisals and was
approved during the Company&#146;s Board of Directors meeting on December&nbsp;18, 2001.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">As required by law, the market concentration notice relating to the change in
control of Copene (currently Braskem) was filed on a timely basis with the
antitrust authorities. Those authorities have imposed no restrictions on the
operations or decisions of the Company or its subsidiaries. The final decision
of the Administrative Economic Defense Council has not been issued, but the
opinions of the ministries of Finance and Justice are favorable.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(iii)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Accounting considerations</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The transactions above have been accounted for by Braskem under the provisions
of Statement of Financial Accounting Standards (&#147;SFAS&#148;) No. 141 and, accordingly, the consolidated financial statements of Braskem
as of and for the year ended December&nbsp;31, 2001 include the results of
operations and cash flows related to Nova Cama&#231;ari, Intercapital Com&#233;rcio e
Participa&#231;&#245;es Ltda. (&#147;Intercapital&#148;), ESAE, Proppet, Conepar, Politeno and
Polialden (the Northeast Assets) from July&nbsp;27, 2001 to December&nbsp;31, 2001.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The acquisition was accounted for using the purchase method with the assets
acquired and liabilities assumed from third parties recorded at fair value. The
portions of the net assets which were already held by the Odebrecht Group were
maintained at their existing book values, and the excess of the proportional
amount of the purchase price over these book values has been considered a
distribution to the Odebrecht Group (Note 17). At the acquisition date, the
transaction resulted in goodwill of US$ 319,122. Since Nova Cama&#231;ari, ESAE,
Intercapital and Conepar are holding companies without any operations, the
purchase price relates to the operational assets acquired of Politeno,
Polialden and Proppet and liabilities assumed of all companies. The purchase
price allocation is shown as follows:</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-18</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Politeno</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Polialden</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Proppet</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Holdings</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Assets acquired</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Current</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">33,139</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">68,723</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15,463</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,057</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">122,382</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Investments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11,432</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">940</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">789</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,020</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15,181</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Property, plant and equipment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">41,620</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">23,910</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">82,936</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">148,471</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other non-current assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,899</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,526</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,464</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">224</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12,113</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">92,090</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">96,099</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">102,652</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,306</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">298,147</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Liabilities assumed</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Current</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20,793</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12,259</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">56,313</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19,623</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">108,988</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Long-term</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,845</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,336</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">54,184</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20,820</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">84,185</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25,638</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16,595</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">110,497</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">40,443</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">193,173</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fair value of net assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">66,452</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">79,504</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(7,845</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(33,137</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">104,974</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Goodwill</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">319,122</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Distribution to the
Odebrecht Group</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">149,367</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total purchase price</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">573,463</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The goodwill has been allocated between Politeno and Polialden based on their
respective estimated fair values on the acquisition date.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The goodwill paid is based on the future profitability of the investments in
the companies acquired and in the expected operational and tax synergy of the
integration of the second-generation companies with the Company. The Company
evaluated the existence of any other intangible assets as defined by
SFAS No.&nbsp;141,
and concluded that there are no other relevant intangible assets that should
have recognized in the accompanying consolidated financial statements.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-19</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The changes in the carrying amount of goodwill, including goodwill on equity investments, for the year ended December&nbsp;31,
2002 and 2001, are as follows:</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="79%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Balance as of January&nbsp;1, 2001</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,044</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Goodwill acquired during the year:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Acquisition of the assets and liabilities of Politeno,
Polialden and Proppet</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">319,122</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Inclusion of goodwill balances already recorded by OPP
PP and subsidiaries</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13,842</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Amortization of goodwill during the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(3,326</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Translation gain</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14,430</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Balance as of December&nbsp;31, 2001</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">349,112</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Translation loss</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(118,431</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Impairment recorded during the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,125</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Balance as of December&nbsp;31, 2002</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">228,556</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The goodwill balance as of December&nbsp;31, 2002 and 2001, has been recorded in the
following business segments:</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="72%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Basic Petrochemicals</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,035</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Polyolefins</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">115,532</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">175,771</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Vinyls</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">511</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">929</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Business Development</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,041</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,152</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Recognized
as goodwill</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">120,084</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">184,887</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Recognized
as investments (equity investees)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">108,472</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">164,225</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">228,556</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">349,112</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-20</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(iv)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Funding of the purchase price</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The immediate principal funding of the payment by Nova Cama&#231;ari of the
consideration for the assets acquired in the auction or otherwise in connection
with the auction of the ESAE Assets was through bridge loans to Nova Cama&#231;ari
from a syndicate of banks in the amount of US$ 481,103. This bridge loan was
repaid on December&nbsp;28, 2001 and was substituted on the same date by the issue
of debentures, in the amount of US$ 269,350 and also by Prepaid Export
Financing in the amount of US$ 250,000.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The remaining funds, US$ 92,360, were obtained, through a Private Financing
Instrument, from companies within the controlling groups of Nova Cama&#231;ari, with
remuneration based on the same terms as those of the Bridge Loan, with interest
at the lower of 25.16% per year or 108.5% of the interbank certificate of
deposit (CDI)&nbsp;rate. As of December&nbsp;31, 2001 the outstanding balance related to
these related parties loans is US$ 62,580 and is presented as current
liabilities.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(v)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Acquisitions of OPP PP and 52114</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">As described in Note 1(b), in August 2002 the Company acquired OPP PP and 52114
from the Odebrecht and Mariani Groups in exchange for 579,397,986 newly issued
common shares and 1,026,498,803 newly issued class &#147;A&#148;
preferred shares.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Because Braskem and OPP PP were both indirectly controlled by the Odebrecht
Group prior to the acquisition of OPP PP by Braskem, the acquisition was
accounted for in a manner similar to a pooling of interests. All assets and
liabilities of OPP PP and its subsidiaries have been included in Braskem&#146;s
consolidated financial statements at their existing carrying values.
Additionally, Braskem&#146;s consolidated financial statements for the year ended
December&nbsp;31, 2001 have been retroactively restated to include OPP PP and its
subsidiaries as from the date on which common control first existed, July&nbsp;25,
2001.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Although the terms of the exchange of Braskem and OPP PP shares were based on
the appraised economic value of each company, the transaction is recorded at
the U.S.&nbsp;GAAP book value of OPP PP&#146;s consolidated net assets as of July&nbsp;25, 2001
as measured under <BR>U.S.&nbsp;GAAP. As of that date, OPP PP&#146;s consolidated liabilities
exceeded its assets by US$ 393,477, and the issuance of Braskem shares to the
Odebrecht Group was therefore considered to be a distribution in that amount.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-21</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The Company&#146;s unaudited consolidated results of operations for the acquisition
of the Northeast Assets and the OPP PP transaction, assuming that they had
occurred at the beginning of 2001, are: net revenues of US$ 2,401,450, loss of
US$ 320,695, and basic and diluted loss per thousand shares of US$ 0.10. The
pro forma results of operations are for information purposes and are not
necessarily indicative of the Company&#146;s actual consolidated results of
operations that would have occurred had the acquisition of the Northeast Assets
and the OPP PP transaction taken place at the beginning of 2001.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The acquisition of 52114 in
exchange for company shares was accounted for using the purchase method with the
assets acquired and liabilities assumed recorded at fair value. The
purchase price of U.S.$6,950 was based on the fair value of Company
shares issued. The purchase
price allocation resulted in zero goodwill. As described in
Note&nbsp;1(b), principal asset of 52114 was a 92.29% shareholding in
Nitrocarbono. The pro forma results of operations
for the 52114 acquisition, assuming that it had occurred at the beginning of
2001, would not be materially different from reported results.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>2</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Summary of significant accounting policies</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(a)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Basis of presentation</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The following aspects affect the comparability of the financial statements
between years:</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="85%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap><FONT size="1"><B>Main aspects</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Note</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Corporate restructuring</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Note 1(c)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Merger of OPP PP, with a base date of July&nbsp;25, 2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Note 1(c - v)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Recognition of the IPI credit on input materials with zero rate</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Note 5</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(i)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of
America (&#147;U.S. GAAP&#148;), which differ in certain respects from the
accounting principles applied by the Company and its affiliates in their
financial statements prepared in accordance with accounting principles
prescribed by Brazilian Corporation Law (&#147;Corporation Law&#148;) or for other
statutory purposes in Brazil.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-22</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(ii)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Shareholders&#146; equity included in these financial statements differs from
that included in the financial statements prepared in accordance with
Corporation Law or for other statutory purposes in Brazil, principally as
a result of (i)&nbsp;differences between the United States dollar and the
indexes mandated over the years for indexation of such financial
statements and (ii)&nbsp;other adjustments made to reflect the requirements of
U.S. GAAP. As from January&nbsp;1, 1996, financial statements prepared under
the Brazilian Corporation Law are no longer subject to indexation.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(b)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Remeasurement of financial statements</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Although the Company transacts the majority of its business in Brazilian Reais
(R$), it has selected the United States dollar as its reporting currency. The
U.S. dollar amounts for all years presented herein have been converted from
Brazilian Reais amounts in accordance with the criteria set forth in U.S.
accounting standards (SFAS&nbsp;No.
52, &#147;Foreign Currency Translation&#148;). This conversion should not be construed as
representing that the amounts in Brazilian Reais actually represent or have
been, or could be, converted into U.S. dollars.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Management of the Company has concluded that the Brazilian economy is no longer
highly inflationary as from January&nbsp;1, 1998, as the increase in the general
price index has been measured at less than 100% over the last three years. The
Company has adopted the Brazilian Real as its functional currency, as from
January&nbsp;1, 1998. Upon effecting this substitution, the deferred tax asset
increased through a credit to cumulative other comprehensive income (loss)&nbsp;in
shareholders&#146; equity.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(i)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Criteria adopted through December&nbsp;31, 1997</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Property, plant and equipment, accumulated depreciation, inventory, certain other
nonmonetary assets and shareholders&#146; equity were remeasured at historical rates of
exchange, and the remaining assets and liabilities denominated in Brazilian Reais were
remeasured at period-end rates (R$1.1164 to US$1.00 at December&nbsp;31, 1997).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Statement of operations accounts were remeasured at the average rate prevailing in the
month of the charge or credit to income, except those relating to assets remeasured at
historical rates, which were calculated based on the assets&#146; U.S. dollar values.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-23</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Gains and losses resulting from the remeasurement of the financial statements were
included in results of the year.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Assets and liabilities denominated in foreign currencies were translated to U.S. dollars
at the official exchange rates reported by the Brazilian Central Bank at each balance
sheet date, and resulting gains and losses were included in results for the year as
foreign currency transaction gains or losses.</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(ii)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Criteria adopted as from January&nbsp;1, 1998</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Property, plant and equipment, accumulated depreciation, inventory, and certain other
nonmonetary assets were converted from historical dollars to the functional currency
(Brazilian Reais) as of January&nbsp;1, 1998 using the exchange rate in effect at that date
(R$1.1164 to US$1.00) and have been maintained in Brazilian Reais thereafter.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">All assets and liabilities are translated from the functional currency to the reporting
currency using the official exchange rates reported by the Brazilian Central Bank at the
balance sheet date (R$3.5333 and R$2.3204 to US$1.00 at December&nbsp;31, 2002 and 2001,
respectively).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Revenue, expenses and gains and losses are translated from the functional currency to
the reporting currency using the monthly weighted-average exchange rates for the period.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Shareholders&#146; equity transactions are recorded at historical exchange rates.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Translation gains and losses are recorded in cumulative translation adjustment, a
component of cumulative other comprehensive income (loss)&nbsp;in shareholders&#146; equity.</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(c)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Basis of consolidation</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(i)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Consolidation of subsidiaries</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">All subsidiaries in which the Company directly or indirectly controls the
voting capital have been consolidated.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-24</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In the consolidated financial statements, the intercompany assets, liabilities,
income, expenses and unrealized gains arising from transactions between
consolidated companies were eliminated. Minority interest in the equity and in
the results of subsidiaries has been segregated in the consolidated balance
sheet and statement of operations, respectively.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(ii)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Equity accounting</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Investments in companies in which the Company owns 20% to 50% of the voting
capital are accounted for using the equity method of accounting (Note 6). The
Company&#146;s principal equity method investees include Copesul, Politeno, Cetrel S.A. &#151; Empresa
de Prote&#231;&#227;o Ambiental (&#147;Cetrel&#148;), NORCELL S.A.
(&#147;Norcell&#148;), Petroflex Ind&#250;stria e Com&#233;rcio S.A.
(&#147;Petroflex&#148;) and
Codeverde &#151; Companhia de Desenvolvimento Rio Verde
(&#147;Codeverde&#148;).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(d)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Foreign currencies</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Monetary assets and liabilities denominated in foreign currencies are
translated into United States dollars at the official exchange rates reported
by the Brazilian Central Bank at each balance sheet date. Translation gains and
losses of those assets and liabilities are included in the consolidated balance
sheet as &#147;cumulative other comprehensive loss.&#148;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(e)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Cash and cash equivalents</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Cash and cash equivalents are carried at cost plus accrued interest. Cash
equivalents consist principally of deposits having a ready market and an
original maturity of 90&nbsp;days or less.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(f)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Trade accounts receivable</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Trade accounts receivable are stated at estimated realizable values. An
allowance for doubtful accounts is provided in an amount considered by
management to be sufficient to meet probable future losses related to
uncollectible accounts and includes the entire amount of receivables in
litigation. The balance of the allowance was US$ 35,278 and US$ 16,611 at
December&nbsp;31, 2002 and 2001, respectively.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-25</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(g)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Inventories</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Inventories are stated at the lower of the average cost of purchase or
production and replacement or realizable values. Allowances for slow moving or
obsolete inventories are recorded when considered appropriate. Imports in
transit are stated at the accumulated cost of each import. The method of
determining cost is used consistently from year to year.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(h)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Intangible assets</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Intangible assets, representing primarily production technology purchased from
third parties, are recorded at cost and are being amortized over a period of 5
- 10&nbsp;years on a straight-line basis.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(i)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Property, plant and equipment</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Property, plant and equipment are recorded at cost, including capitalized
interest incurred during the period of construction of major new facilities.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Depreciation is computed on a straight-line basis over the useful lives of the
assets as follows:</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="69%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Annual</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>depreciation</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>rates (%)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Buildings and improvements</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">2.00 to 10.00</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Plant and equipment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">1.30 to 10.00</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fixtures and installations</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">2.27 to 20.00</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Up to 20</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The useful lives of assets are
based on management estimates. Changes in the estimated useful lives
are reflected on a prospective basis, and the depreciation rates are
adjusted to those necessary to depreciate the remaining book value
over the remaining estimated life. The depreciation rates listed
above are stated as a percentage of the original cost and reflect
these changes in estimates.</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The Company evaluates its property, plant and equipment for impairment whenever
events or changes in circumstances indicate that the carrying amount of such
assets may not be recoverable. Recoverability of such assets is measured by a
comparison of the carrying amount of the assets to future undiscounted net cash
flows expected to generated by the assets. If an asset is considered to be
impaired, the impairment to be recognized is measured as the excess of the
carrying amount of the assets over the fair value of the assets. In 2002 the
subsidiary Polialden recognized an impairment loss of US$1,566 relating to the
abandonment of its project to construct a polypropylene unit.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-26</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(j)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Plant maintenance</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Routine maintenance and repair costs are expensed as incurred.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Planned major maintenance of the production facilities occurs every three to
five years, depending on the facility. Expenditures that extend the useful
life or improve the capacity or efficiency of the production facilities,
including materials and services, are recorded in deferred charges and
amortized over the expected period of benefit, generally three to five years.
Amortization of deferred charges amounted to US$ 16,185 in 2002, US$ 10,346 in
2001 and US$ 7,519 in 2000.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(k)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Goodwill</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Goodwill represents costs in excess of fair values assigned to the underlying
net assets of companies acquired from third parties. Until December&nbsp;31, 2001
the goodwill was amortized using the straight-line method over 10&nbsp;years.
Goodwill generated after July&nbsp;1, 2001 is not being amortized in 2001, and all
goodwill amortization was discontinued on January&nbsp;1, 2002. Goodwill is subject
to annual impairment analysis, however, as determined by SFAS No.&nbsp;142
&#147;Goodwill and Other Intangible Assets&#148; (Note 2(s)). Amortization of goodwill
is generally deductible for Brazilian income tax purposes.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(l)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Revenues and expenses</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Revenues are recognized when: (i)&nbsp;the products have been transferred to the
customer and the risk of ownership has passed to the customer; (ii)&nbsp;persuasive
evidence of the basis of the sale exists; (iii)&nbsp;the price is fixed or
determinable; and (iv)&nbsp;collectibility is reasonably assured. Expenses and costs
are recognized on the accrual basis.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Shipping and handling costs are reported within selling, general and
administrative expenses and amounted to US$ 51,183, US$ 23,059 and US$ 6,635 in
the years ended December&nbsp;31, 2002, 2001 and 2000. If these costs had been
classified in cost of sales, gross profit would have been US$ 438,946, US$
301,625 and US$ 296,108 in the years ended December&nbsp;31, 2002, 2001 and 2000.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Advertising costs are expensed when incurred and were not significant in the
years ended December&nbsp;31, 2002, 2001 and 2000.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-27</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(m)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Compensated absences</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The liability for future compensation for employee vacations is fully accrued
as they are earned.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(n)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Income taxes</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Income taxes in Brazil comprise Federal Income Tax and Social Contribution, a
federal tax based on income.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">For the purposes of these financial statements, Braskem applied SFAS No.&nbsp;109,
&#147;Accounting for Income Taxes&#148; for all periods presented.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">A valuation allowance is provided to reduce or eliminate net deferred tax
assets when realization is not yet deemed more likely than not; the valuation
allowance is adjusted or reversed when management considers that realization is
reasonably assured.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(o)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Research and development</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Research and development costs are expensed as incurred and recorded in the
statement of operations within selling, general and administrative expense.
Expenditure on research and development was US$ 5,682, US$ 4,097 and US$ 2,319,
for the years ended December&nbsp;31, 2002, 2001 and 2000, respectively.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(p)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Financial instruments</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Braskem and its subsidiaries utilize certain derivative instruments to manage
their exposure to fluctuations in the Brazilian Real/ U.S. dollar exchange
rate. Until December&nbsp;31, 2000, the derivatives were recorded at spot market
rates prevailing at the balance sheet date with gains/loss recorded as net
financial expenses. Starting January&nbsp;1, 2001, derivatives are recorded at fair
value, as determined by SFAS No.&nbsp;133 &#147;Accounting for Derivative Instruments
and Hedging Activities&#148; (Note 16(b)).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Braskem calculates the fair value of financial instruments using quoted market
prices whenever available. When quoted market prices are not available for
various types of financial instruments (such as forwards, options and swaps),
Braskem uses standard pricing models with market-based inputs, which take into
account the present value of estimated future cash flows.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-28</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(q)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Use of estimates</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. Estimates are used for, but
not limited to: fair values of assets and liabilities of acquired companies,
accounting for allowance for doubtful accounts, depreciation and amortization,
asset impairments, depreciable lives of assets, useful lives of intangible
assets, tax valuation allowances and contingencies.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(r)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Reclassifications</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Certain amounts in the financial statements for prior years have been
reclassified to conform to the current year presentation.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(s)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Accounting change &#151; Goodwill and other intangible assets</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Effective January&nbsp;1, 2002, the Company adopted SFAS No.&nbsp;142, &#147;Goodwill and
Other Intangible Assets.&#148; SFAS No. 142 no longer permits the amortization of
goodwill and indefinite-lived intangible assets. Instead, these assets must be
reviewed annually (or more frequently under various conditions) for impairment
in accordance with this statement. This impairment test uses a fair value
approach rather than the undiscounted cash flows approach. The goodwill
impairment test under SFAS No.&nbsp;142 requires a two-step approach, which is
performed at the reporting unit level, as defined in SFAS No.&nbsp;142. Step one
identifies potential impairments by comparing the fair value of the reporting
unit to its carrying amount. Step two, which is only performed if there is a
potential impairment, compares the carrying amount of the reporting unit&#146;s
goodwill to its implied value, as defined in SFAS No.&nbsp;142.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-29</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">If the carrying amount of the reporting unit&#146;s goodwill exceeds the implied
fair value of that goodwill, an impairment loss is recognized for an amount
equal to that excess. The amortization of goodwill included in investments in
affiliates and joint venture is no longer recorded, in accordance with the new
rules. Intangible assets that do not have indefinite lives are amortized over
their useful lives and reviewed for impairment in accordance with SFAS
No.&nbsp;144, &#147;Accounting for the Impairment or Disposal of Long-Lived Assets.&#148;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In accordance with SFAS No.&nbsp;142, effective January&nbsp;1, 2002, the Company ceased
amortizing existing goodwill, including goodwill recorded on equity
investments.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The Company performs the impairment test annually on December&nbsp;31. The initial
application of the impairment test did not result in an impairment charge.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The following table presents the
impact of SFAS No. 142 on reported net income
(loss)&nbsp;had the standard been in effect in prior periods:</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="73%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Years
ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Reported net income (loss)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(50,244</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">188,050</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Goodwill amortization</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,326</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,414</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Adjusted net income (loss)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(46,918</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">190,464</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Adjusted net income (loss)&nbsp;per thousand shares</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(53.22</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">109.84</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(t)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Environmental matters</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Accruals for environmental matters are recorded when it is probable that the
liability has been incurred and the amount of the liability can be reasonably
estimated, based on current law and existing technologies. Environmental costs
are capitalized if the costs extend the life of the property, increase its
capacity, and/ or mitigate or prevent contamination from future operations.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-30</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(u)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Recently issued accounting pronouncements</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In 2001, the Financial Accounting Standards Board (FASB)&nbsp;issued SFAS No.&nbsp;143,
&#147;Accounting for Asset Retirement Obligations.&#148; SFAS No.&nbsp;143 is effective for
financial statements issued for fiscal years beginning after June&nbsp;15, 2002.
Braskem will adopt SFAS No.&nbsp;143 on January&nbsp;1, 2003. The provisions of SFAS No.
143 require companies to record an asset and related liability for the costs
associated with the retirement of a long-lived tangible asset if a legal
liability to retire the asset exists. The Company has evaluated this new
pronouncement and does not expect that it will have a significant impact on the
Company&#146;s financial condition, liquidity or results of operations.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">SFAS No.&nbsp;145 addresses financial accounting and reporting for extinguishment of
debt. It supersedes SFAS No.&nbsp;4, &#147;Reporting Gains and Losses from Extinguishment
of Debt&#148;; SFAS No.&nbsp;44, &#147;Accounting for Intangible Assets of Motor Carriers&#148;
and SFAS No.&nbsp;64, &#147;Extinguishments of Debt Made to Satisfy Sinking-Fund
Requirements.&#148; SFAS No.&nbsp;145 also amends certain paragraphs of SFAS No.&nbsp;13,
&#147;Accounting for Leases.&#148; SFAS No.&nbsp;145 is effective for fiscal years beginning
after May&nbsp;15, 2002. The Company has evaluated this new pronouncement and does
not expect that it will have a significant impact on the Company&#146;s financial
condition, liquidity or results of operations.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In 2002, the FASB issued Interpretation (FIN)&nbsp;No.&nbsp;45, &#147;Guarantor&#146;s Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others.&#148; The initial recognition and measurement provisions of
FIN No.&nbsp;45 apply on a prospective basis to guarantees issued or modified after
December&nbsp;31, 2002. As required, Braskem adopted the disclosure requirements of
the Interpretation as of December&nbsp;31, 2002 (see Note 13(c)). Braskem will
apply the initial recognition and measurement provisions on a prospective basis
effective January&nbsp;1, 2003. The Interpretation modifies existing disclosure
requirements for most guarantees and requires that at the time a company issues
a guarantee, the Company must recognize an initial liability for the fair value
of the obligation it assumes under that guarantee. The Company has evaluated
this new pronouncement and does not expect that it will have a significant
impact on the Company&#146;s financial condition, liquidity or results of
operations.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-31</FONT>


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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In June 2002, the FASB issued SFAS No.&nbsp;146, &#147;Accounting for Costs Associated
with Exit or Disposal Activities,&#148; which nullifies EITF Issue 94-3, &#147;Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit
an Activity.&#148; This statement, which is effective for exit or disposal
activities initiated after December&nbsp;31, 2002, will change the measurement and
timing of costs associated with exit and disposal activities undertaken by the
Company. The Company has evaluated this new pronouncement and does not expect
that it will have a significant impact on the Company&#146;s financial condition,
liquidity or results of operations.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In January 2003, the FASB issued FIN No.&nbsp;46, &#147;Consolidation of Variable
Interest Entities.&#148; FIN No.&nbsp;46 clarifies the application of Accounting Research
Bulletin No.&nbsp;51, &#147;Consolidated Financial Statements,&#148; to certain entities in
which equity investors do not have the characteristics of a controlling
financial interest or in which equity investors do not bear the residual
economic risks. The interpretation applies to variable interest entities
(&#147;VIEs&#148;) created after January&nbsp;31, 2003, and to VIEs in which an enterprise
obtains an interest after that date. It applies in the fiscal year or interim
period beginning after June&nbsp;15, 2003, to VIEs in which an enterprise holds a
variable interest that was acquired before February&nbsp;1, 2003. In financial
statements issued after January&nbsp;31, 2003, the interpretation also requires an
enterprise to disclose the nature, purpose, size and activities of VIEs which
are reasonably possible to be within the scope of FIN No.&nbsp;46, together with the
enterprise&#146;s maximum exposure to loss with respect to these entities. Braskem
is in the process of evaluating this new pronouncement and does not currently
expect that it will have a significant impact on the Company&#146;s financial
condition, liquidity or results of operations.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In April 2003, the FASB issued SFAS No.&nbsp;149, &#147;Amendment of Statement 133 on
Derivative instruments and Hedging Activities,&#148; which amends and clarifies
financial accounting and reporting for derivative instruments, including
certain derivative instruments embedded in other contracts (collectively
referred to as derivatives) and for hedging activities SFAS
No.&nbsp;133, &#147;Accounting
for Derivative Instruments and Hedging Activities.&#148; This Statement is effective
for contracts entered into or modified after June&nbsp;30, 2003. The Company has
evaluated this new pronouncement and does not expect that it will have a
significant impact on the Company&#146;s financial condition, liquidity or results
of operations.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-32</FONT>


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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In May 2003, the FASB issued SFAS No.&nbsp;150, &#147;Accounting For Certain Financial
Instruments with Characteristics of Both Liabilities and Equity.&#148; This
Statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. It requires that an issuer classify a financial instrument that is
within its scope as a liability (or an asset in some circumstances). Many of
those instruments were previously classified as equity. This Statement is
effective for financial instruments entered into or modified after May&nbsp;31,
2003. Braskem is in the process of evaluating this new pronouncement and does
not currently expect that it will have a significant impact on the Company&#146;s
financial condition, liquidity or results of operations.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-33</FONT>


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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>3</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Related parties</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The balances with and the amount of the transactions to and from related
parties are as follows:</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="41%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="35"><FONT size="1"><B>December 31, 2002</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="35"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Other non</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>current</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Current</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Long-term</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Current assets</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>assets</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>liabilities</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>liabilities</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Receivables</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Receivables</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>from</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>from</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Advances</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Accounts</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Advances to</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>related</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>related</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>from</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Related</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap><FONT size="1"><B>Affiliates</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>receivable</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>suppliers</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>parties</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>parties</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>customers</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Loans</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Suppliers</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Other</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>parties</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center">&nbsp;</TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Borealis OPP S.A.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
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</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Cetrel S.A.- Empresa de Prote&#231;&#227;o Ambiental</FONT></DIV></TD>
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    <TD align="right"><FONT size="1">143</FONT></TD>
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<TR valign="bottom" bgcolor="#eeeeee">
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<TR valign="bottom">
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<TR valign="bottom" bgcolor="#eeeeee">
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    <TD align="right"><FONT size="1">140,355</FONT></TD>
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    <TD align="right"><FONT size="1">72,840</FONT></TD>
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<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Fenol Rio Qu&#237;mica Ltda.</FONT></DIV></TD>
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    <TD align="right"><FONT size="1">246</FONT></TD>
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<TR valign="bottom">
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    <TD align="right"><FONT size="1">18</FONT></TD>
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<TR valign="bottom" bgcolor="#eeeeee">
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<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Pronor Petroqu&#237;mica S.A.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">4,644</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Termoel&#233;trica do Planalto Paulista</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">297</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Other</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">7</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">615</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">690</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">110</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">15,795</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">503</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">615</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">8,341</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5,290</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">75,173</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">186,117</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">20,491</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,863</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
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    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
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    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-34</FONT>


<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
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    <TD width="1%">&nbsp;</TD>
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    <TD width="3%">&nbsp;</TD>
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    <TD width="3%">&nbsp;</TD>
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    <TD width="1%">&nbsp;</TD>
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    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
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    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="35"><FONT size="1"><B>December 31, 2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="35"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Other non</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>current</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Long-term</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="15"><FONT size="1"><B>Current assets</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>assets</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Current liabilities</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>liabilities</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="15"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Advances</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Advances</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Accounts</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Advances to</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>for capital</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>from</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>receivable</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>suppliers</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Loans</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>increase</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Loans</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Loans</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>customers</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Suppliers</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Loans</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1"><B>Affiliates</B></FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Borealis OPP S.A.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">2,675</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">CBP &#151; Companhia Brasileira de Poliuretanos</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5,828</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Cetrel S.A. &#151; Empresa de Prote&#231;&#227;o Ambiental</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">87</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5,203</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,192</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,124</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Ciquine &#151; Companhia Petroqu&#237;mica do Nordeste</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3,101</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Codeverde &#151; Companhia de Desenvolvimento Rio Verde</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">134</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">COPESUL &#151; Companhia Petroqu&#237;mica do Sul</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">86,511</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Copesul International Trading Inc.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">40,385</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">EDN &#151; Estireno do Nordeste S.A.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,885</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Fenol Rio Qu&#237;mica Ltda.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,917</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Isopol
&#151; Petroqu&#237;mica S.A.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">543</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">NORCELL S.A.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">789</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">2,119</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Odebrecht S.A.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">94,165</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">228,083</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Oxiteno do Nordeste S.A.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3,207</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Petrobras &#151; Petr&#243;leo Brasileiro S.A.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">4,939</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">9,448</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">41,616</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">10,597</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Petrobras Distribuidora S.A.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">705</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,716</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3,801</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Petroflex Ind&#250;stria e Com&#233;rcio S.A.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5,314</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">10,203</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Polibrasil S.A. &#151; Ind&#250;stria e Com&#233;rcio</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">4,490</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Politeno Ind&#250;stria e Com&#233;rcio S.A.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">8,597</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Pronor Petroqu&#237;mica S.A.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">23,999</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Other</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">552</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">79</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">45</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">32,868</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5,203</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">95,909</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">134</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">20,854</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">300,257</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">2,675</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">130,632</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">16,522</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
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</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-35</FONT>


<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
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    <TD width="38%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
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    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="11"><FONT size="1"><B>Year ended December 31, 2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="11"><FONT size="1"><B>Year ended December 31, 2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="11"><FONT size="1"><B>Year ended December 31, 2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>Sales of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>Purchases</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>Sales of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>Purchases</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>Sales of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>petrochemical</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>Financial</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>petrochemical</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>Financial</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>petrochemical</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>Purchases</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>Financial</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>products,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>materials</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>income</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>products,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>materials</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>income</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>products,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>of&nbsp;materials</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>income</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>services</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>and</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>(expense)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>services</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>and</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>(expense)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>services</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>and</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>(expense)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>and utilities</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>services</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>net</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>and utilities</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>services</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>net</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>and utilities</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>services</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>net</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
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    <TD colspan="3"><HR size="1" noshade></TD>
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    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1"><B>Afilliates</B></FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Borealis OPP S.A.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">21,450</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">43,604</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">CBP
&#151; Companhia Brasileira de Poliuretanos</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">(2,743</FONT></TD>
    <TD nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Cetrel S.A. &#151; Empresa de Prote&#231;&#227;o Ambiental</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">36</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">4,602</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">122</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">2,284</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">32</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,776</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Ciquine &#151; Companhia Petroqu&#237;mica do Nordeste</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">63,226</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">73,986</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">COPESUL &#151; Companhia Petroqu&#237;mica do Sul</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">10,915</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">408,367</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">11,664</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">418,770</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Copesul
International Trading Inc.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">19,996</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">9,869</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">EDN &#151; Estireno do Nordeste S.A.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">79,168</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">94,466</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Isopol &#151; Petroqu&#237;mica S.A.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">28,345</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Nitrocarbono S.A.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">76,900</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">OPP Qu&#237;mica S.A.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">133,576</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Oxiteno do Nordeste S.A.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">113,487</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">121,478</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Petrobras Distribuidora S.A.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,196</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">890</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">473</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">20,310</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">187</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">632</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">24,676</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">(1,718</FONT></TD>
    <TD nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Petrobras &#151; Petr&#243;leo Brasileiro S.A.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">756</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">722,908</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">167,858</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">23,475</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,245,980</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">2,265</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">47,961</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,222,765</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">(4,657</FONT></TD>
    <TD nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Petroflex Ind&#250;stria e Com&#233;rcio S.A.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">74,001</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,242</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">75,491</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,478</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">79,832</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,665</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Polialden Petroqu&#237;mica S.A.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">54,049</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">99,892</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Polibrasil S.A. &#151; Ind&#250;stria e Com&#233;rcio</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">90,257</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">121,323</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Politeno Ind&#250;stria e Com&#233;rcio S.A.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">181,720</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">207,292</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">227,873</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Pronor &#180;Petroqu&#237;mica S.A.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">23,046</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">(323</FONT></TD>
    <TD nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Rionil Compostos Vin&#237;licos Ltda.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">6,252</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">4,286</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Sansuy Ind&#250;strias Qu&#237;micas S.A.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">13,492</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">10,869</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Trikem S.A.</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">182,735</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,672</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">8,448</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Year ended December 31</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">309,818</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,156,763</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">169,100</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">800,509</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,697,213</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">864</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,289,031</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,250,889</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3,738</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-36</FONT>




<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Trade accounts receivable and suppliers include the balances of
transactions with related parties that result mainly from purchases and
sales of goods and services, which were realized using prices and terms
equivalent to the average terms and prices practiced in transactions with
third parties.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The balance of the loan from Copesul International Trading Inc. arises
from a specific arrangement negotiated with OPP Qu&#237;mica and its subsidiary
Lantana, with rates equivalent to the market rates. Besides the US dollar
exchange variation, the average annual financial charges correspond to
7.76% to 8.25%.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(c)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The balance of the loan from Borealis OPP S.A. is subject to monthly
interest of 2.4%.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(d)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The balance of the loan to Petrobras -Petr&#243;leo Brasileiro S.A. is subject
to interest equal to the Long-Term Interest Rate (TJLP)&nbsp;plus 2% per annum.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(e)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The balances of the loans from CBP &#151; Companhia Brasileira de Poliuretanos
and Pronor Petroqu&#237;mica S.A. are subject to interest equal to 108.5% of
the interbank certificate of deposit (CDI)&nbsp;rate.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(f)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The balance of the loan payable to Odebrecht S.A. is subject to interest
of 20.75% per annum.</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The price of ethylene purchased from Copesul results from a process that shares
the margin with the second generation companies of the petrochemical sector.
This process consists of apportioning the gross margin in proportion to the
return on investments. The prices practiced for the other products are
established based on various market factors, including international ones.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The price of naphtha, the main raw material of Braskem supplied by Petrobras,
is negotiated between Petrobras and the petrochemical companies, using as a
reference the price practiced in the European market. Braskem is also importing
naphtha at a volume equivalent to 30% of its consumption. The price reference
is the international market (ARA).</FONT></TD>
</TR>
</TABLE>

<P align="center"><FONT size="2">F-37</FONT>


<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>4 Inventories</B></FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="72%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Finished goods</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">106,343</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">123,740</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Work in process</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,727</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,835</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Raw materials</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">40,081</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">38,268</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Spare parts and maintenance suppliers</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">52,599</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">47,950</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Advances to suppliers and sundry materials</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">27,032</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">43,555</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19,374</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20,722</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">253,156</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">277,070</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Long term inventories, net (*)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(22,553</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(8,248</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">230,603</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">268,822</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(*)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Based on turnover and detailed analysis, part of the inventory of spare
parts, maintenance supplies and others has been reclassified to long-term,
and an allowance for obsolescence of US$ 3,270 has been recorded in 2002.
No allowance was recorded at December&nbsp;31, 2001.</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>5 Taxes recoverable</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Taxes recoverable includes US$ 67,541 in current assets and US$ 148,842 in
noncurrent assets relating to a December 2002 Federal Supreme Court decision
which awarded the subsidiary OPP Qu&#237;mica a federal excise tax (IPI)&nbsp;credit for
past purchases of materials with a 0% IPI rate. The total amount of the gain
from this decision was US$ 284,509, including approximately US$ 75,000 which
had already been offset against taxes payable in prior years. The tax
authorities have filed appeals to the Federal Supreme Court requesting
clarification of the calculation of the credit but not challenging its
existence.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">This court decision affects only the OPP Qu&#237;mica facility in the state of Rio
Grande do Sul. Several of the Company&#146;s subsidiaries have filed claims for the
same IPI credit at other facilities, but the disputed amounts will not be
recognized as gains before final decisions are issued by the courts.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-38</FONT>



<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>6</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Investments</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The Company&#146;s investments in associated companies accounted for by the equity
method consist primarily of its shareholdings in Copesul, Politeno,
Cetrel,
Codeverde, Norcell and Petroflex. Summarized financial information of these
companies was as follows:</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="37%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Shareholding</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Shareholding in voting</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>in total capital (%)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>capital (%)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Equity
in earnings of affiliates</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Investment</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">COPESUL &#151; Companhia Petroqu&#237;mica do Sul (*)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">29.46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">29.46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">29.46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">29.46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,693</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,332</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">63,748</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">83,224</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Politeno Ind&#250;stria e Com&#233;rcio S.A. (*)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">30.99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">30.99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,834</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,956</FONT></TD>
    <TD nowrap><FONT size="2"></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">41,080</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">69,963</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">CETREL S.A. &#151; Empresa de Prote&#231;&#227;o Ambiental</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35.57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">36.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35.57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">36.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(517</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,188</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,055</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,651</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,009</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Codeverde Companhia de Desenvolvimento Rio Verde</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35.42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35.39</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35.42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35.39</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(109</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(112</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(101</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,379</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">NORCELL S.A.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">76.52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">88.42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">86.15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">50.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(475</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">841</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,811</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13,684</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">48,251</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Petroflex Ind&#250;stria e Com&#233;rcio S.A.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20.12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20.12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20.14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20.14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,068</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">859</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,766</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,472</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,233</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(185</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(671</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,410</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18,450</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15,309</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,017</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,889</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">142,045</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">239,509</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Goodwill
and purchase accounting adjustments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,158</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(12,107</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">108,473</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">164,933</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22,467</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6,090</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,889</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">250,518</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">404,442</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(*)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Recorded as an investment as from July&nbsp;25, 2001.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-39</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Copesul is engaged in the manufacture, trade, import and export of basic
petrochemical products and the production and supply of assets, such as steam,
water, compressed air, electrical energy to the companies in the Southern
Petrochemical Complex in the state of Rio Grande do Sul, as well as providing
several services to these companies.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Politeno is engaged in the manufacture, processing, direct or indirect trade,
consignment, export, import and transportation of polyethylene, as well as the
participation in other companies. The main raw material for all of its products
is ethylene, which is currently provided by Braskem.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Cetrel provides environmental protection and waste treatment services to
companies in the Cama&#231;ari Petrochemical Complex.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Codeverde is a holding company for real estate in the state of Bahia.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Norcell is engaged in forestation activities. Although Braskem owns more than
50% of the voting shares, the terms of the Shareholders Agreement with Riocell
S.A. grant significant participating rights to Riocell. As a result, Braskem
does not have unilateral control over Norcell, and the investment is recorded
on the equity method.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Petroflex is a manufacturer of synthetic rubber.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-40</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Copesul&#146;s financial statements are summarized below:</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="58%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>

    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>

    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>

</TR>

<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Balance sheet</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Current assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">542,538</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">407,622</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Property, plant and equipment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">337,983</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">579,485</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">61,040</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">83,479</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">941,561</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,070,586</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Current liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">500,042</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">369,242</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Long-term liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">225,129</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">418,847</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Shareholders&#146; equity</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">216,390</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">282,497</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">941,561</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,070,586</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>



<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="53%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Years ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Statement of operations</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">967,346</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,042,174</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cost of sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(782,113</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(889,545</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gross profit</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">185,233</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">152,629</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(30,020</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(40,755</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Non-operating income (loss)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(104,443</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(135,372</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income tax expense, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,723</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,599</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Net income (loss)</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">55,493</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(14,899</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-41</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Reconciliation to investment balance and equity in earnings (loss):</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

<TD nowrap align="center" colspan="7"><FONT size="1"><B>December
31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Proportional amount of affiliate&#146;s shareholders&#146;
equity above</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">63,748</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">83,224</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Goodwill, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,674</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,780</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Purchase accounting adjustments, excluding goodwill</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(947</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Investment in affiliate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">66,422</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">87,057</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<tr><td>&nbsp;</td></tr>

<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

<TD nowrap align="center" colspan="7"><FONT size="1"><B>Years
ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Braskem&#146;s equity in earnings (loss)&nbsp;of affiliate -
excluding preacquisition earnings</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD align="right"><FONT size="2">8,693</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD align="right"><FONT size="2">3,257</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Amortization of goodwill, negative
goodwill and purchase accounting
adjustments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(925</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Equity in earnings (loss)&nbsp;of affiliate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD align="right"><FONT size="2">8,693</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD align="right"><FONT size="2">2,332</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Goodwill relating to the
acquisition of the Company&#146;s original equity interest in
Copesul in May 1992, was amortized until December&nbsp;31, 2001. Effective January
1, 2002, goodwill is no longer amortized.</FONT></TD>
</TR>



</TABLE>
<P align="center"><FONT size="2">F-42</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>7</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Property, plant and equipment</B></FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="34%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>December 31, 2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>December 31, 2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Accumulated</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Accumulated</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Cost</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>depreciation</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Net</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Cost</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>depreciation</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Net</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Land</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,025</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,025</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12,083</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12,083</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Buildings and improvements</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">189,784</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(66,887</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">122,897</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">279,162</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(98,319</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">180,843</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Machinery and equipment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,422,036</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(491,265</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">930,771</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,971,139</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(677,174</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,293,965</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Furniture and fixtures</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,333</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(7,951</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">382</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">48,423</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(24,125</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">24,298</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Vehicles</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,038</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,447</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">591</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,257</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,476</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">781</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Computers</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">21,712</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(14,983</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,729</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,796</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(4,296</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Others</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">40,761</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(16,606</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">24,155</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">57,750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(28,944</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">28,806</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Construction in progress</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">90,101</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">90,101</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">216,278</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">216,278</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,783,790</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(600,139</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,183,651</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,593,888</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(835,334</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,758,554</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>


<P align="center"><FONT size="2">F-43</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>8 Debt</B></FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="26%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="23%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="23%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Annual financial charges</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Foreign currency</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Foreign notes payable (Eurobonds)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">US$125,000 due February 2004</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><FONT size="2">US$ exchange variation &#043; interest of 11.5%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">27,978</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14,478</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">US$100,000 due October 2004</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><FONT size="2">US$ exchange variation &#043; interest of 11.0%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">55,718</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">101,925</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">US$150,000 due June 2007</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><FONT size="2">US$ exchange variation &#043; interest of 9.0%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">150,188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">150,225</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">US$250,000 due July 2007</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><FONT size="2">US$ exchange variation &#043; interest of 10.6%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">261,806</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">328,071</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Advances on export contracts</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><FONT size="2">US$ exchange variation &#043; interest from 3.8% to 12.0%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">88,015</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">575,670</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" valign="top"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fixed</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">US$ exchange variation &#043; interest from 2.9% to 4.8% over LIBOR</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">266,891</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16,315</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3" valign="top"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Working capital</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">US$ exchange variation &#043; interest from 1.7% to 4.9% over LIBOR or fixed interest from 3.1% to 12.0%</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">564,027</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">397,169</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Local currency</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" valign="top"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Working capital</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest from 0.3% to 8.7% &#043; indexed monetary restatement (TJLP, IGP-M and CDI) or fixed interest from 3.0% to 12.0%</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">180,052</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">246,693</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fixed</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">FINAME</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fixed interest of 3.7% &#043; indexed monetary restatement (TJLP)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">824</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">160,191</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">BNDES</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><FONT size="2">Fixed interest from 3.9% to 10.8% &#043; indexed monetary</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><FONT size="2">restatement (TJLP, TR and UMBNDES)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">76,246</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13,361</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><FONT size="2">TJLP &#043; interest of 4.0% or IGP-M &#043; interest of 4.5%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">85,205</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">40,619</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&#147;Compror&#148;
financing of purchases</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17,887</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
</TR>
<TR valign="bottom"  bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,774,837</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,044,717</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Less: short-term debt</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(303,074</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(249,894</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom"  bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,471,763</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,794,823</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Less: current portion of long-term debt</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(413,039</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(578,776</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Long-term debt</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,058,724</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,216,047</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-44</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The weighted average interest rates on short-term debt as of December&nbsp;31, 2002
were 17.33% per annum for Brazilian currency debt and 9.04% per annum for US
dollar debt.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The long-term amounts mature as follows:</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="85%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2004</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">363,511</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2005</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">158,501</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2006</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">131,279</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2007</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">405,233</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2008</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,058,724</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Loans related to the acquisition of fixed assets are backed by pledges of
property, plant and equipment, shares of stock and letters of guarantee from
management and shareholders. Certain working capital financing is backed by
letters of credit and bank guarantees. Shares of OPP have been pledged as
collateral for debt totaling US$ 34,861 at December&nbsp;31, 2002. Shares of
Polialden and Politeno have been pledged as collateral for debt totaling US$
12,388 at December&nbsp;31, 2002.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(a)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Foreign notes payable (Eurobonds)</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(i)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Issued by the Company</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In June 1997, Copene issued Eurobonds amounting to US$ 150,000 falling due in
ten years and bearing annual interest of 9% to be paid semiannually in the
months of June and December, commencing in December 1997.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(ii)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Eurobonds issued by OPP Petroqu&#237;mica and Trikem</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In February 1996, OPP Petroqu&#237;mica (merged into OPP Qu&#237;mica in December 2000)
issued Eurobonds in the amount of US$ 125,000 falling due at February&nbsp;22, 2004
and bearing annual interest of 11.5% to be paid semiannually in the months of
February and August in each year, commencing in August 1996.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-45</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In October 1996, OPP Petroqu&#237;mica issued Eurobonds in the amount of US$ 100,000
falling due at October&nbsp;29, 2004 and bearing annual interest of 11% payable
semiannually in April and October of each year, commencing in April 1997.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Up to December 2002, the subsidiary Lantana had reacquired US$ 180,000 of the
OPP Petroqu&#237;mica notes, and had resold US$ 37,000.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In July 1997, Trikem issued Eurobonds in the amount of US$ 250,000, falling due
on July&nbsp;24, 2007 and with annual interest of 10.625% payable semiannually in
January and July of each year, commencing in January 1998. These notes grant
exclusively to Trikem the right to repurchase the Eurobonds on July&nbsp;24 of each
year as from July 2002.</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(b)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Long-term financing</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(i)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Foreign currency</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In December 2001, the Company obtained funds in the amount of US$ 250,000 for
the prepayment of exports, which funds were directed to partial payment of the
shares acquired in the auction of the ESAE Assets mentioned in Note
1(c-i).
This loan was placed in two tranches and structured by a pool of banks led by
ABN AMRO Real S.A. and Citibank S.A. The first tranche, in the amount of US$
80,000, has a settlement term up to December 2004 and is subject to interest of
3.75% per annum plus semiannual Libor, payable semiannually. The second
tranche, in the amount of US$ 170,000, has a settlement term up to 2006 and is
subject to interest of 4.75% per annum plus semiannual Libor, payable
semiannually. Amortization of the principal is linked with the Company&#146;s
exports and scheduled up to their related maturities. The debt balance, at
December&nbsp;31, 2002, is US$ 250,047.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(ii)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Local currency</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>BNDES</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Local currency fixed capital loans include to various loans related to the
expansion of the production capacity (including polyester &#151; Proppet),
environmental projects, operation control centers, laboratory and waste
treatment station. These loans bear annual charges from 3.9% to 5%, plus the
Long-term Interest Rate (TJLP)&nbsp;disclosed by the Brazilian Central Bank. The
principal and charges are payable monthly up to July 2007.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-46</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The consolidated financial statements also include the financings obtained by
Copene Participa&#231;&#245;es from BNDES for the purchase of shares in the privatization
of Polialden and Politeno, at the restated amount of US$ 12,388 (US$ 21,406 at
December&nbsp;31, 2001). The balances are subject to the Referential Rate (TR)&nbsp;and
annual interest of 6.5% and are amortized semiannually in 20 installments from
February 1997 to August 2006. These loans are guaranteed by the shares
themselves and the surety of ESAE.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(c)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Working capital</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(i)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Foreign currency</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In the parent company, loans for working capital in foreign currency, in the
amount of US$ 168,265, refer to financings of imports of raw material (US$
13,614) and prepayments of export (US$ 154,651). These loans will be settled in
various dates up to June 2006, through a link with future Company exports.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In June 2000, OPP Petroqu&#237;mica received an advance from a foreign customer
(prepayment of export) in the amount of US$ 75,300. In addition to the foreign
exchange variation, the advance is subject to annual interest of 1.75% over
semiannual LIBOR. The maximum term for shipment is December 2003, and the
current debt balance is US$ 49,676 thousand.</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In December 2002, OPP Qu&#237;mica received an advance from foreign customers
(prepayment of export), in the amount of US$ 97,200. In addition to the
exchange variation, the advance is subject to annual interest of 3.75% over
semiannual LIBOR. This contract is backed by a surety bond and will be paid
through partial semiannual shipments from June 2003 to June 2006. The current
debt balance is US$ 97,406.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Other financings in foreign currency of the subsidiary company OPP Qu&#237;mica, in
the amount of US$ 196,000, are subject to the exchange rate variation and
annual average interest of 8.83%. These financings are backed by promissory
notes guaranteed by the directorate of OPP Qu&#237;mica and ODEQUI.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-47</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(ii)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Local currency</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In December 2002, Unibanco S.A. granted a loan for working capital in the
amount of R$ 150,000 thousand, falling due in January 2003 and bearing interest
of 100% of the CDI plus an annual spread of 0.25%, payable upon final maturity.
This contract is backed by a pledge of trade notes and sureties from the
directorate. At December&nbsp;31, 2002, the debt balance of this loan amounts to US$
42,946.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Other local currency working capital loans of Braskem and its subsidiaries
refer to working capital loans and guaranteed account loans from various
financial institutions, which are backed by pledges of trade notes and sureties
from the directorate.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(d)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The amounts recorded in current assets and long-term receivables as
prepayment of financings correspond to the remittance of financial funds
made by CPC Cayman and Lantana for an advanced settlement of the
prepayment of exports, which are presented in short and long-term
liabilities at their gross amounts, without deducting these prepayments.</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>9</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Debentures</B></FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="81%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>1st series &#151; maturing October&nbsp;1, 2006</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest of 110.00% of CDI from 10/01/01 to 11/30/02, 118.33% of CDI from
12/1/02 to 10/01/04, thereafter to be deliberated by debenture
holders, with put option on 10/01/04</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100,444</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">151,595</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>2nd series &#151; maturing October&nbsp;1, 2006</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest of 13.25% p.a. over Market General Price Index (IGP-M)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">63,362</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">63,831</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Former OPP PP &#151; maturing July&nbsp;31, 2007</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest of 5.00% p.a. over Long-Term, convertible into 606,907 thousand
shares</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">182,124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">345,930</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">215,426</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Less: current</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(9,071</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(11,308</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Long-term</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">336,859</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">204,118</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-48</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>10</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Taxes and contributions payable &#151; Long-term liabilities</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">This balance comprises primarily taxes which Braskem and its subsidiaries are
challenging in the judicial system. Although management, supported by its legal
advisors, believes that the outcome of these lawsuits will be favorable to the
subsidiaries, the questioned amounts are accrued as liabilities and updated for
the variation in the SELIC interest rate. These liabilities will be reversed
when Braskem and its subsidiaries receive a final favorable decision on the
specific cases.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>11</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Income tax and social contribution on net income</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(a)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Tax rates</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Income taxes in Brazil include Federal Income Tax and Social Contribution on
Net Income (&#147;CSL&#148;). There is no state or local income taxes in Brazil. The
statutory rates applicable in each period were as follows (in percentages):</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="60%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>February to</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>January, 2000</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>December, 2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Federal income tax</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Social contribution</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Composite marginal income tax rate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">34.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">34.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">37.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">34.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-49</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(b)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Income tax reconciliation</B></FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="62%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Income (loss)&nbsp;before income tax, equity in results
of affiliates, minority interest
and change in accounting principle</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(527,106</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,595</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">184,083</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income tax and social contribution benefit (expense)
at statutory rate - 34%</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">179,216</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,222</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(62,588</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income tax on permanent differences</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,867</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(74,770</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Tax effect of social contribution
tax exemption ((i) below)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(36,305</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,255</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16,285</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Benefit from tax holidays ((ii) below)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,574</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">41,313</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net change in valuation allowance</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(166,720</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">81,342</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,648</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,730</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,153</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">405</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Tax (expense)&nbsp;benefit, per consolidated
statement of operations</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(20,422</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14,332</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,937</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(i)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Braskem and its subsidiaries OPP Qu&#237;mica and Trikem, have obtained
judicial orders exempting them from the CSL (Note 11(e)).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(ii)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Certain of the production facilities have qualified for income tax
incentives which provide full or partial exemptions from income tax on
&#147;exploration profit&#148; for a fixed period of time (Note 11(d)).</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-50</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(c)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Deferred income tax</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Deferred tax assets (liabilities)&nbsp;are comprised of the following:</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="73%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Deferred tax assets</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net operating loss carryforwards</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">133,760</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">133,628</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Permanent Assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(15,776</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,089</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Deferred expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">28,520</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">32,791</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Investment in Copesul</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">183</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">653</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Nondeductible accrued expenses and other temporary differences</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">138,960</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">92,490</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gross deferred tax assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">285,647</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">260,651</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Deferred tax liabilities</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accelerated depreciation</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,914</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(4,691</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accrued liability for legal proceedings,
net of restricted deposits</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,379</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Inventories</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,393</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loan discount</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,619</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other temporary differences</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(8,369</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(23,441</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gross deferred tax liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(13,676</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(32,130</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Valuation allowance</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(227,677</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(172,534</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Net deferred tax asset</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">44,294</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">55,987</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Long-term assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">61,208</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">79,753</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Long-term liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(16,914</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(23,766</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">44,294</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">55,987</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-51</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">At December&nbsp;31, 2002, Braskem and its subsidiaries have tax loss carryforwards
totaling US$ 535,040, of which US$ 3,129 have been used as the basis for
recognizing net deferred tax assets and the remainder have a full valuation
allowance. These tax loss carryforwards do not expire, but their utilization is
limited to 30% of the taxable income in a subsequent year, and the balances are
not indexed to inflation or exchange rates. Tax loss carryforwards are also
lost if a corporate entity is extinguished such as through a merger.
Furthermore, the net incremental benefit of these tax losses is limited in the
medium term, since several industrial units are already benefited by income tax
exemptions and reduced income tax rates, as described below.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(d)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Corporate income tax holidays</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The Brazilian Federal government offers full or partial income tax holidays to
companies which construct or expand facilities in northeastern Brazil. Several
of the plants operated by Braskem and its subsidiaries have been granted such
tax holidays, as summarized below:</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="51%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>%exemption</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>or reduction in</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Expiration</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap><FONT size="1"><B>Location</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap><FONT size="1"><B>Product</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>income tax rate</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>date</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">Cama&#231;ari</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Basic petrochemicals and utilities
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">75</FONT></TD>
    <TD nowrap valign="top"><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">2011</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Cama&#231;ari</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Polyethylene
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">75</FONT></TD>
    <TD nowrap valign="top"><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">2011</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">Cama&#231;ari</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
PVC
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">100</FONT></TD>
    <TD nowrap valign="top"><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">2004</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Marechal Deodoro</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
PVC
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">100</FONT></TD>
    <TD nowrap valign="top"><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">2008</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-52</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, the caustic soda and EDC plants in Bahia and Alagoas and the DMT
and caprolactam plants in Bahia are eligible for partial tax holidays as
follows:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="86%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>% reduction</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>in income</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap><FONT size="1"><B>Period</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>tax rate</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">January&nbsp;1, 1998 to December&nbsp;31, 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">37.5</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">January&nbsp;1, 2004 to December&nbsp;31, 2008</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25.0</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">January&nbsp;1, 2009 to December&nbsp;31, 2013</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.5</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The benefit of the tax holiday may not be distributed to stockholders and is
recorded in a capital reserve (appropriated retained earnings), which can only
be used to increase capital or absorb losses.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(e)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Social contribution</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The subsidiary OPP Qu&#237;mica obtained a final court decision which exempted it
from the social contribution.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In 1992, Braskem and the current subsidiaries Trikem and Polialden also
received final favorable decisions exempting them from the social contribution,
but the government filed actions to rescind those decisions. In 1997, the
Superior Court of Justice (STJ)&nbsp;overturned the 1992 decision. Since then the
companies have filed several appeals to reverse this unfavorable decision.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Based on the opinion of legal counsel, the appeals should be successful in
maintaining the companies&#146; exemption. If, however, the appeals are not
successful, legal counsel has indicated that the loss of the exemption will be
effective only as from the date of a final unfavorable decision and may not be
applied retroactively. For this reason, no liability has been recorded. If a
retroactive claim were made by the government, the exposure to Braskem and its
subsidiaries would be approximately US$ 67,500, including interest but
excluding fines.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-53</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>12</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Pension plan</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(a)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>ODEPREV &#151; Odebrecht Previd&#234;ncia</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Several of the Company&#146;s subsidiaries are sponsors of a defined contribution
pension plan founded by the Odebrecht Group. The consolidated contribution for
the year ended December&nbsp;31, 2002 was US$ 289.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(b)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Funda&#231;&#227;o Petrobras de Seguridade Social &#151; PETROS</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Braskem and its subsidiary Trikem sponsor a defined benefit plan for their
employees. The plan is managed by the Funda&#231;&#227;o Petrobras de Seguridade Social
(&#147;PETROS&#148;). Its main objectives are to complement retirement benefits provided
by the government and to implement social assistance programs supported by the
sponsoring companies. The sponsoring companies and their employees pay monthly
contributions to PETROS based on their employees&#146; remuneration.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Financial and actuarial information for the pension plan, as provided by the
independent actuary, are provided below:</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Components of net pension cost</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Service cost</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,701</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,927</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,679</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest cost</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,354</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,370</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,437</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,055</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,297</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Return on assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Actual</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(15,377</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(10,039</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(11,035</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gain (loss)&nbsp;deferred</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12,194</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,939</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,647</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Expected</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(3,183</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(4,100</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(4,388</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Amortizations</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Unrecognized net transition asset, being
Recognized over 15&nbsp;years from January&nbsp;1, 1989</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(620</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(727</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(929</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Actuarial losses (gains)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,703</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Employee contributions</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,085</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,568</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,290</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net periodic pension cost</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,870</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">902</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">509</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-54</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>




<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="61%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>





<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Discount rate &#151; %</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Salary increase rate &#151; %</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Return on assets &#151; %</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Projected benefit obligation</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(68,328</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(91,668</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(89,504</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fair value of plan assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">55,942</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">68,503</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">95,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Funded (unfunded)&nbsp;position</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(12,386</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(23,165</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,896</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Unrecognized net obligation</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(514</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,565</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,786</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Unrecognized net (gain)&nbsp;loss</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12,715</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">30,724</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">23,747</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Prepaid (accrued)&nbsp;pension</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(185</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,994</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">26,857</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Changes in benefit obligation</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Benefit obligation at the beginning of the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">91,668</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">89,504</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">90,619</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Service cost</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,701</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,927</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,679</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest cost</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,354</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,370</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,437</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Actuarial loss</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,697</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16,652</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,939</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Benefit payments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(4,954</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6,470</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(7,323</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Effect of exchange rate changes</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(33,138</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(15,315</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(7,847</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Benefit obligation at the end of the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">68,328</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">91,668</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">89,504</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Change in plan assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fair value of plan assets at the beginning of
the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">68,503</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">95,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">96,310</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Actual return on plan assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15,377</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,039</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11,035</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Employer contribution</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,698</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,907</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,026</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Participants contribution</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,085</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,568</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,290</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Benefit payments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(4,954</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6,470</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(7,323</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loss on segregation of assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(18,893</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Effect of exchange rate changes</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(25,767</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(15,048</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(7,938</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fair value of plan assets at the end of the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">55,942</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">68,503</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">95,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In 2002 Braskem recognized a minimum pension liability of US$ 10,502,
representing the difference between the accumulated benefit obligation and the
fair value of plan assets. This liability was substantially recognized through
a charge to a shareholders&#146; equity account.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-55</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(c)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>PREVINOR &#151; Associa&#231;&#227;o de Previd&#234;ncia Privada</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Braskem and its subsidiaries
Polialden and Nitrocarbono sponsor defined benefit and defined
contribution plans which are managed by PREVINOR &#151;
Associa&#231;&#227;o de Previd&#234;ncia Privada. Contributions to
the defined contribution plans totaled US$&nbsp;308 in the year ended
December&nbsp;31, 2002 (US$&nbsp;150 in 2002).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Financial and actuarial
information for the defined benefit pension plans, as provided by the
independent actuary, are provided below:</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="75%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Components of net pension cost</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Service cost</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest cost</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">564</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">237</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">583</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">245</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Return on assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Actual</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(457</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(776</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gain (loss)&nbsp;deferred</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(364</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">369</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Expected</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(821</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(407</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
</TR>

</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-56</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="75%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Amortizations</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>


<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Amortization
of prior service cost</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(71</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(80</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Actuarial losses (gains)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net periodic pension cost</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(274</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(232</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Discount rate &#151; %</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Salary increase rate &#151; %</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Return on assets &#151; %</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Projected benefit obligation</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(4,129</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(5,503</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fair value of plan assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,490</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,679</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Funded (unfunded)&nbsp;position</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">361</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">176</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Unrecognized net obligation</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(705</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,045</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Unrecognized net (gain)&nbsp;loss</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">833</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,104</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Prepaid (accrued)&nbsp;pension</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">489</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">235</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Changes in benefit obligation</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Benefit obligation at the beginning of the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,503</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,662</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Service cost</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest cost</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">564</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">237</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Actuarial loss</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(273</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">734</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Benefit payments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(122</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(138</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Effect
of business acquisitions</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">406</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Effect of exchange rate changes</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,968</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Benefit obligation at the end of the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,129</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,503</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Change in plan assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fair value of plan assets at the beginning of
the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,679</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,788</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Actual return on plan assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">457</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Employer contribution</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Benefit payments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(122</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(138</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Expenses
paid</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(10</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Effect
of business acquisitions</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">550</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Effect of exchange rate changes</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,079</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fair value of plan assets at the end of the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,490</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,679</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-57</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>13</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Commitments and contingencies</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(a)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Commitments</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Purchase commitments</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Braskem and its subsidiaries have electric power purchase contracts for the
consumption of energy by its industrial plants located in the states of Alagoas
and Bahia. The minimum annual commitment under these contracts is approximately
US$ 17,000 and the contracts extend for five years.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The Company purchases ethylene and propylene for its units in the Southern
Petrochemical Complex from Copesul under a long-term contract through 2014.
The minimum annual purchase commitment is 268,200 metric tons of ethylene and
262,200 metric tons of propylene. If the minimum is not purchased the Company
must pay for the unpurchased amount at 40% of the current price. Based on 40%
of the December&nbsp;31, 2002 prices, this minimum commitment is US$ 93,401 per
year.</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(b)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Contingencies</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Braskem and its subsidiaries are defendants in various civil and labor cases.
Based on the advice of its legal counsel, management has established
liabilities for those cases in which an unfavorable outcome is probable.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Descriptions of the more significant cases follow.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-58</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(i)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Collective labor agreement</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The chemical workers union in the Cama&#231;ari region (SINDIQU&#205;MICA) and the
syndicate of chemical manufacturers in the same region (SINPEQ)&nbsp;are disputing
in the courts whether the wage and salary indexation clause in their collective
labor agreement was overruled by a 1990 economic policy law which restricted
wage and salary increases. Braskem, Trikem, Polialden, Nitrocarbono and
Politeno operated plants in the region in 1990 and are members of SINPEQ. The
union is requesting that salaries and wages be adjusted retroactively and
cumulatively since 1990.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The most recent ruling, in December 2002, was favorable to SINPEQ and
established that the economic policy law overruled the collective labor
agreement. Nevertheless, the decision is still subject to appeal.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Management, based on the opinion of its legal advisers, believes that the
SINPEQ position will prevail. As a result, no loss has been accrued for this
contingency.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(ii)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Polialden preferred shareholders</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Banco Fator, as the administrator of Fundo Fator Sinergia, a mutual fund, filed
a Declaratory Action to obtain a ruling that the preferred shares of Polialden
do not have fixed dividends and therefore are entitled to participate in the
distribution of profits on the same basis as common shareholders. Polialden
management, supported by the decision of the Brazilian Securities Commission
(CVM)&nbsp;and the opinion of its legal advisors, understands that no additional
dividend for preferred shares is due, and Polialden is contesting the lawsuit,
which is pending judgement.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Jurisprudence in similar cases is generally favorable to Polialden. However, in
August 2001, contrary to the opinion about the matter issued by the CVM in
August 2000, as well as opinions of renowned jurists, the 4th Panel of the
Higher Court of Justice (STJ)&nbsp;decided, in a Special Appeal of a shareholder, to
grant the plaintiff participation in the payment of dividends on an equal basis
with common shares. This decision is not the final decision and is being
appealed by Polialden. On July&nbsp;28, 2002, Polialden made a judicial deposit to
cover its exposure (US$ 1,603) to possible losses from the lawsuit.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-59</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(iii)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Civil litigation of OPP Qu&#237;mica and Trikem</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The subsidiaries OPP Qu&#237;mica and Trikem have civil claims about various
matters, which amount to approximately US$ 71,300. Management and its internal
legal advisors, supported by recent opinions of its external legal advisors,
believe that losses on these claims are not probable, and no liability has been
recorded.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(c)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Guarantees</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In the ordinary course of business, the Company and its subsidiaries provide
guarantees to financial institutions which provide financing to certain
customers. At December&nbsp;31, 2002, the nominal value of the guaranteed customer
balances was US$ 122,164.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>14</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Minority interest</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Minority interest relates to the interest of minority shareholders in the
capital of Trikem, Companhia Alagoas Industrial &#151; CINAL, CPP &#151; Companhia
Petroqu&#237;mica Paulista, Polialden, Copene Mon&#244;meros Especiais S.A., Tegal
Terminal de Gases Ltda and Nitrocarbono S.A..</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>15</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Shareholders&#146; equity</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(a)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Capital</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Preferred shares are not convertible into common shares and do not carry voting
rights, but they have priority to a minimum non-cumulative annual dividend of
6%, depending on the availability of income for distribution. Only the
preferred &#147;A&#148; shares have equal participation with the common shares in the
remaining income, and this right exists only after the payment of dividends to
the holders of preferred shares. The preferred &#147;A&#148; shares also have equal
rights with the common shares to receive distributions of shares arising from
the capitalization of other reserves.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>

<P align="center"><FONT size="2">F-60</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Shares subscribed through the Northeast Investment Fund (FINOR)&nbsp;tax incentives
(preferred &#147;B&#148; shares) do not have preferential rights in the event of new
share subscriptions. Subsequent to the expiration of the period of
non-transferability as foreseen in special legislation, these shares may be
converted into preferred &#147;A&#148; shares at any time, at the ratio of two preferred
&#147;B&#148; shares for one preferred &#147;A&#148; share.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In the event of dissolution of the
Company, the preferred &#147;A&#148; and &#147;B&#148; shares
have priority to capital reimbursement.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(b)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Dividends</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Shareholders have the right to a mandatory minimum dividend of 25% of net
income, computed in accordance with the terms of the Brazilian Corporate Law
and payable in Brazilian Reais.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">As described in the Memoranda of Understanding for Shareholders&#146; Agreements
signed by (i)&nbsp;Odebrecht Qu&#237;mica S.A., Petroqu&#237;mica da Bahia S.A., Funda&#231;&#227;o
Petrobras de Seguridade Social &#151; PETROS and Previ &#151; Caixa de Previd&#234;ncia dos
Funcion&#225;rios do Banco do Brasil and (ii)&nbsp;Odebrecht Qu&#237;mica S.A., Petroqu&#237;mica
da Bahia S.A. and Petrobras Qu&#237;mica S.A. &#151; Petroquisa, on July&nbsp;20 and July&nbsp;3,
2001, respectively, Braskem must distribute dividends in a percentage not less
than 50% of available net income of each year, as long as remaining reserves
are sufficient to maintain efficient operations and development of the
Company&#146;s business.</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">According to the terms agreed in the Particular Instrument of Re-Ratification
of a Particular Deed of Issue of Non-convertible Debentures with Floating
Guarantee of the Tenth Issue and in the Export Prepayment Credit Agreement, the
payment of dividends, interest on own capital or any other participation in
profits is limited to at most 50% of net income for the year or 6% of the unit
value of the preferred &#147;A&#148; and &#147;B&#148; shares, whichever is higher.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In accordance with the Company&#146;s statutes, Braskem may pay interest on its own
capital to its shareholders, within the terms of Article&nbsp;9, paragraph 7, of Law
9249/1995. Interest, when paid or credited, will be considered as part of the
priority dividend on preferred shares as well as part of the minimum dividend
requirement.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(c)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Shares held in treasury</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">On December&nbsp;31, 2002, Braskem
held in treasury 54,620 thousand class &#147;A&#148;
preferred shares at the total cost of US$ 15,412.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
<P align="center"><FONT size="2">F-61</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(d)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>American Depositary Receipt (ADR)&nbsp;Program</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">On October&nbsp;20, 1998, the Company obtained a Level II registration with the
Securities and Exchange Commission (SEC)&nbsp;and, on December&nbsp;21, 1998, started
trading American Depositary Receipts (ADRs) on the New York Stock Exchange
(NYSE), as follows:</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT SIZE="2" FACE="wingdings">&#216;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="92%"><FONT size="2">Type of shares: preferred class &#147;A&#148;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT SIZE="2" FACE="wingdings">&#216;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="92%"><FONT size="2">Each ADR represents 50 (fifty)&nbsp;preferred &#147;A&#148; shares</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT SIZE="2" FACE="wingdings">&#216;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="92%"><FONT size="2">The shares are negotiated as ADRs under the symbol &#147;BAK&#148; at the NYSE</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT SIZE="2" FACE="wingdings">&#216;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="92%"><FONT size="2">Depositary Bank overseas: Citibank N.A. &#151; New York branch</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT SIZE="2" FACE="wingdings">&#216;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="92%"><FONT size="2">Custodian Bank in Brazil: Banco Ita&#250; S.A.</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>16</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Financial instruments</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Braskem and its subsidiary companies engage in transactions involving financial
instruments to manage the financial requirements of their operations, to
supplement cash flow requirements, to guarantee the supply of raw materials and
to hedge their U.S. dollar denominated debt. Risk management is carried out by
adopting financial market mechanisms which reduce the exposure of the Company&#146;s
assets and liabilities, protecting its equity.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The net book values of the financial assets and liabilities of Braskem and its
subsidiaries at December&nbsp;31, 2002 are equivalent to their approximate market
values. The main financial instruments are comprised of the following accounts:</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(a)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Investments</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The market values of the investments in the associated companies Copesul and
Petroflex, the shares of which are traded in the stock exchange, were estimated
based on the final market quotations on the S&#227;o Paulo Stock Exchange, where
most of the shares are traded. This estimate does not necessarily reflect the
realizable value of a representative lot of shares.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">At December&nbsp;31, 2002, the market value of these shares held by Braskem and its
subsidiaries is US$ 55,111 for Copesul and US$ 4,836 for Petroflex. At May&nbsp;31,
2003, these market values were US$ 108,936 for Copesul and US$ 10,665 for
Petroflex. No allowance for loss on these investments has been recorded
because, based on projected cash flow analyses and independent valuation
studies, the decline in the value of these investees is believed to be
temporary.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
<P align="center"><FONT size="2">F-62</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(b)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Derivatives</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Since Braskem operates in the international market, where it obtains funding
for its operations and investments, it is exposed to market risks related to
variations of foreign currency exchange rates and international interest rates.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Braskem developed a risk management policy as from December&nbsp;31, 2001 with the
following objectives: maintain coverage of principal and interest settlements
(consolidated)&nbsp;maturing within 12&nbsp;months for, at least (i)&nbsp;60% of Braskem&#146;s
total U.S.-dollar indebtedness that is related to exports (trade finance),
excluding Advances on Currency Contracts (ACCs) with a remaining maturity of up
to 6&nbsp;months and Advances on Export Contracts (ACEs) and (ii)&nbsp;75% of the total
debt in U.S. dollars unrelated to exports (non-trade finance). Compliance with
this policy varies based upon applicable market conditions, credit availability
and cash balances.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Braskem uses various kinds of currency risk management instruments, some of
them using available cash. The most common transaction using available cash
adopted by Braskem involves foreign currency cash investments (certificates of
deposit, international funds, time deposits and overnight funds) and options.
The most common foreign currency risk management instruments without using
available cash are swap contracts (exchange of U.S. dollar variation for
Interbank Deposit Certificate (CDI)&nbsp;rate) and forwards.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Effective January&nbsp;1, 2001, the Company adopted SFAS No.&nbsp;133, &#147;Accounting for
Derivative Instruments and Hedging Activities,&#148; as amended. The Company&#146;s
contracts did not meet the criteria to qualify as the hedge of an exposure to
foreign currency or interest rate risk. Therefore, the Company has accounted
for the derivative transactions by calculating the unrealized gain or loss at
the balance sheet date and changes in the fair value of all derivatives are now
being recorded in current operations.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Until the adoption of SFAS No. 133, the derivative instruments would be accounted
for as a &#147;no hedging designation&#148; instrument, and any gain or loss thereon
would be recognized currently in earnings at the settlement amount at each
closing date. As a result of adopting SFAS 133 as of January&nbsp;1, 2001, the
Company recorded a net asset of US$ 1,767 (net of income tax effects of US$
589), reflecting the net fair value on such date of its derivative
financial instruments and the contra-entry is presented as &#147;Cumulative effect of a change
in accounting principle&#148; in the statement of operations for the year ended
December&nbsp;31, 2001.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-63</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">On December&nbsp;31, 2002, Braskem and its direct and indirect subsidiaries had
swap, forward and option contracts for foreign currency and interest, with a
total notional amount of US$ 154,915, falling due between January&nbsp;2, 2003 and
June&nbsp;1, 2004. These instruments are intended to reduce the impacts of an
eventual devaluation of the Brazilian real and an increase in international
interest rates on U.S. dollar liabilities.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">At December&nbsp;31, 2002, the fair value of derivative instruments in an asset
position was US$ 391 (2001 &#151; US$ 5,214), and the fair value of derivative
instruments in a liability position was US$ 6,370 (2001 &#151; US$ 12,542). These
amounts are recorded in the balance sheet as other current assets and fair
market value of derivative financial instruments (current liability),
respectively.</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>17</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Major non-cash investing and financing transactions</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The following non-cash transactions were excluded from the statement of cash
flows:</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The corporate reorganization transactions involving companies under
common control, as described in Note 1(b).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The acquisitions of OPP PP and 52114 in exchange for Braskem shares, as
described in Note 1(c-v).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(c)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The distributions by OPP PP included in the statement of changes in
stockholder&#146;s equity, which were primarily made through debits to the
intercompany loan accounts involving the Odebrecht Group.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>18</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Business segments</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The Company has four identifiable reportable segments, as more fully described in Note 1(a):</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT SIZE="2" FACE="wingdings">&#216;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="92%"><FONT size="2">Basic Petrochemicals</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT SIZE="2" FACE="wingdings">&#216;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="92%"><FONT size="2">Polyolefins</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT SIZE="2" FACE="wingdings">&#216;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="92%"><FONT size="2">Vinyls</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT SIZE="2" FACE="wingdings">&#216;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="92%"><FONT size="2">Business Development</FONT></TD>
</TR>


</TABLE>
<P align="center"><FONT size="2">F-64</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The accounting policies underlying the financial information provided for the
segments are based on accounting principles determined by Brazilian Corporate
Legislation. Management of the Company evaluates segment performance
information generated from the statutory accounting records. Intersegment
transactions are recorded at their statutory amounts.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The local currency information related to the statement of operations data has
been translated to U.S. dollars, for convenience purposes, at the average rate
for each period presented. The information at the balance sheet date has been
translated to U.S. dollars at the respective year-end exchange rates.</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Braskem prepared a reconciliation of segment information to its consolidated
financial statements and restated prior period segment information as
practicable.</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Basic Petrochemicals</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">757,231</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,859,121</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Polyolefins</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,174,213</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,157,998</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Vinyls</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">650,906</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">927,881</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Business Development</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">94,556</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">77,170</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">908,369</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">342,619</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">US GAAP adjustments and eliminations</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(650,321</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(661,543</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Total segment assets</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,934,954</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,703,246</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Basic Petrochemicals</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">717,729</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">529,611</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Polyolefins</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">114,258</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">195,819</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Vinyls</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,110</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,141</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Business Development</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">563</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">190,114</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12,042</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">US GAAP adjustments and eliminations</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(778,556</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(343,171</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Total investments</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">250,518</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">404,442</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-65</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="61%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Years ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Basic Petrochemicals</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,127,142</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,330,987</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,568,713</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Polyolefins</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">873,748</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">341,364</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Vinyls</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">403,930</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">153,864</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Business Development</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">92,506</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">28,368</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">US GAAP adjustments and eliminations</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(106,210</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(82,692</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(13,613</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Net sales</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,391,116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,771,891</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,555,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Basic Petrochemicals</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">84,348</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">132,255</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">218,335</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Polyolefins</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">312,667</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">52,570</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Vinyls</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18,739</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">23,574</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Business Development</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,721</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,208</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">US GAAP adjustments and eliminations</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100,688</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">32,445</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,373</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Operating income</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">522,163</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">244,052</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">225,708</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Less:</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Equity in earnings in affiliates</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22,467</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6,090</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,889</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Minority interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">65,024</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(63,848</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income taxes</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(20,422</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14,332</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,937</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Financial income (expenses)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(991,988</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(214,145</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(39,131</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Non-operating income (expense)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(57,281</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(26,312</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,494</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cumulative effect of a change in accounting principle</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,767</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Net income (loss)</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(460,037</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(50,244</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">188,050</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Basic Petrochemicals</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(40,768</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(44,958</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(58,050</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Polyolefins</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(14,639</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(7,757</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Vinyls</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(15,130</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(4,904</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Business Development</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(460</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,432</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">US GAAP adjustments and eliminations</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,041</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,886</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,454</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Total depreciation</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(61,956</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(54,165</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(51,596</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-66</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Information on the geographical composition of the Company&#146;s sales is as
follows:</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Years ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Domestic</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,854,741</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,573,139</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,387,435</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Exports from Brazil</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">536,375</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">198,752</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">167,665</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Total net sales</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,391,116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,771,891</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,555,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Exports from Brazil (classified by geographic destination)</FONT></TD>
</TR>
</TABLE>


<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Years ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Americas</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">313,371</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">130,834</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">131,532</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Far East</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">102,196</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">33,623</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Europe</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">91,160</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22,632</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">34,929</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">29,648</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11,663</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,204</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">536,375</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">198,752</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">167,665</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>19</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Earnings per share</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The following table provides a reconciliation of the numerators and
denominators used in computing earnings per share and the allocation of
distributed and undistributed income between common and preferred stockholders
under the two-class method of computing earnings per share as required by SFAS
No.&nbsp;128.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-67</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="62%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Weighted average</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Per thousand</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Net income</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>number of shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>shares (whole US</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(loss)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(thousands)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>dollars)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>2002</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Basic and diluted loss available to common shareholders</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(460,037</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,198,834</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(383.74</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>2001</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Basic and diluted loss available to common shareholders</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(50,244</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">881,548</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(57.00</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>2000</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Net income</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">188,050</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Less dividends declared and paid in current period:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Preferred class A</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(29,865</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Preferred class B</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(257</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total undistributed earnings</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">157,928</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income allocated to:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Preferred class A</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">To satisfy 6% minimum dividend requirement</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6,915</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Pro-rata share of excess
shared with common shareholders</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">96,239</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Preferred class B</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">To satisfy 6% minimum dividend requirement</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(15</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Basic income available to common shareholders</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">68,617</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">646,693</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">106.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Effect of conversion of preferred class B
to preferred class A</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.03</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Diluted income available to common shareholders</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">68,617</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">646,693</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">106.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Basic and diluted earnings per share are the same in 2002 and 2001 because the
effects of conversion of convertible debentures (Note 9) would be antidilutive.
No dilutive securities existed in 2000.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-68</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>20</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Restatement of 2001 consolidated financial statements</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">As described in Note 1(c-v), the Company&#146;s consolidated financial
statements have been retroactively restated to include OPP PP and its
subsidiaries as from July&nbsp;25, 2001, the date that Braskem and OPP PP came under
common control and to eliminate intercompany transactions for that
period. The following table shows the consolidation of OPP PP into
Braskem for the respective periods presented.</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="53%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="15"><FONT size="1"><B>As of December 31, 2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="15"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Braskem -</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>before</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>consolidation of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>OPP PP (as</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>Eliminations</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>restated, see</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>and</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Braskem -</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Note 20(b))</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>OPP PP</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
<TD nowrap align="center" colspan="3"><FONT size="1"><B>reclassifications</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>restated</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Current assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">433,796</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">517,278</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(41,632</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">909,442</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Investments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">159,868</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">96,651</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">147,923</FONT></TD>
    <TD nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">404,442</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Goodwill, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">336,406</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,581</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">(161,100</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">184,887</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Property, plant and equipment, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,078,429</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">680,125</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,758,554</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other non-current assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">243,378</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">241,328</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(38,785</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">445,921</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Total assets</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,251,877</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,544,963</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(93,594</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,703,246</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Current liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">391,695</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,169,607</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(41,633</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,519,669</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Long-term liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">943,326</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">759,976</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(38,786</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,664,516</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Total liabilities</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,335,021</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,929,583</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(80,419</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,184,185</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Minority interest</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">132,579</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">200,625</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(9,592</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">323,612</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Shareholders&#146; equity</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">784,277</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(585,245</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(3,583</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">195,449</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Total liabilities and shareholders&#146; equity</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,251,877</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,544,963</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(93,594</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,703,246</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-69</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="53%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="15"><FONT size="1"><B>For the year ended December 31, 2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="15"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Braskem&nbsp;-</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>&nbsp;</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>before</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>OPP PP - Five</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

<TD nowrap align="center" colspan="3"><FONT size="1"><B>consolidation
of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>month-period</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>OPP PP (as</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>ended</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>restated,
see</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>December</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Braskem -</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

<TD nowrap align="center" colspan="3"><FONT size="1"><B>Note&nbsp;20(b))</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>31,2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Eliminations</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>restated</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net sales, net of allowances</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,382,050</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">457,792</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(67,951</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,771,891</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cost of sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,186,779</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(328,379</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">67,951</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,447,207</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gross profit</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">195,271</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">129,413</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">324,684</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">133,485</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">110,567</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">244,052</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Non-operating income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(162,587</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(77,870</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(240,457</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income before income tax, equity in results of
affiliates, minority interest and change in
accounting principle</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(29,102</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">32,697</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,595</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income tax</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14,524</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(192</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14,332</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income before equity in results of affiliates,
minority interest and change in accounting
principle</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(14,578</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">32,505</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17,927</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Equity in results of affiliates</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,358</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6,863</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(3,585</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6,090</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Minority interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,265</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(62,583</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(63,848</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income before change in accounting principle</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(11,485</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(36,941</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(3,585</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(52,011</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cumulative effect of change in accounting
principle, net of income tax effect</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,767</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,767</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loss for the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(9,718</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(36,941</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(3,585</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(50,244</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Basic and diluted earnings (losses)&nbsp;per thousand
common shares</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(15.03</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(57.00</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(b)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">After issuing the consolidated financial statements of the Company for the year
ended December&nbsp;31, 2001, management of the Company determined that the original
accounting for the acquisition of the Northeast Assets (Note 1(c)) in July 2001
did not appropriately reflect the fact that the Odebrecht Group had indirect
control of the Company immediately after the ESAE Auction.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-70</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Braskem S.A.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Notes to the consolidated financial statements<br>
for the years ended December&nbsp;31, 2002, 2001 and 2000<br>
Expressed in thousands of U.S. dollars, unless otherwise stated</B>
<HR size="1" noshade></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The consolidated financial statements for the year ended December&nbsp;31, 2001 have
therefore been restated to record the portions of the Northeast Assets that
were purchased by the Company from the Odebrecht Group at their carry over
basis. The excess of the purchase price over the book value of the Northeast
Assets has been reflected as a distribution to the Odebrecht Group. The
effects of the restatement on the consolidated balance sheet and statement of
operations are summarized below:</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="91%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="64%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>As originally</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>reported</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>As restated</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Balance sheet as of December&nbsp;31, 2001:</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Investments in affiliated companies</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">171,014</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">159,868</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Goodwill, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">486,149</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">336,406</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Property, plant and equipment, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,094,486</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,078,429</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Long-term
liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">945,334</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">943,326</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Shareholders&#146; equity</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">959,215</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">784,277</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Statement of operations for the year ended December&nbsp;31, 2001:</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cost of sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,187,592</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,186,779</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">132,672</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">133,485</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income tax benefit</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16,077</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16,363</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Equity in earnings of affiliated companies</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,095</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,358</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loss for the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(11,080</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(9,718</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Basic and diluted loss per common share</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(17.13</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(15.03</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="39%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-71</FONT>



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BRASKEM S.A.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
o
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 1-14894
BRASKEM S.A.
(Exact Name of Registrant as Specified in its Charter)
N/A
(Translation of Registrant's name into English)
Federative Republic of Brazil
(Jurisdiction of Incorporation or Organization)
Av. das Nações Unidas, 4777
São Paulo, SP - CEP 05477-000 Brazil
(Address of principal executive offices)
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of Each Class
Name of Each Exchange in which Registered
Preferred Shares, Class A, no par value
New York Stock Exchange*
American Depositary Shares ("ADSs"),
each representing 50 Preferred
Shares, Class A
New York Stock Exchange
*
Not for trading, but only in connection with the
registration of American Depositary Shares, pursuant to the
requirements of the United States Securities and Exchange
Commission.
Securities registered pursuant to Section 12(g) of the Act:
None
Securities for which there is a reporting obligation
pursuant to Section 15(d) of the Act:
None
The total number of issued shares of each class of stock of BRASKEM S.A.
as of December 31, 2002 was:
1,226,091,148
Common Shares, no par value per share
2,160,764,336
Preferred Shares, Class A, no par value per share
11,457,740
Preferred Shares, Class B, no par value per share
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes
x
No
o
Indicate by check mark which financial statement item the Registrant has
elected to follow Item 17
o
Item 18
x
.
TABLE OF CONTENTS
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISER
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
ITEM 3. KEY INFORMATION
ITEM 4. INFORMATION ON THE COMPANY
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
ITEM 8. FINANCIAL INFORMATION
ITEM 9. THE OFFER AND LISTING
ITEM 10. ADDITIONAL INFORMATION
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
ITEM 15. CONTROLS AND PROCEDURES
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
ITEM 16B. CODE OF ETHICS
PART III
ITEM 17. FINANCIAL STATEMENTS
ITEM 18. FINANCIAL STATEMENTS
ITEM 19. EXHIBITS
SIGNATURES
INDEPENDENT AUDITORS' REPORT
BYLAWS
DEPOSIT AGREEMENT
SHAREHOLDER AGREEMENT
FIRST AMENDMENT TO SHAREHOLDER AGREEMENT
MEMO OF UNDERSTANDING REGARDING SHAREHOLDER AGR.
FIRST AMENDMENT TO MEMO
MEMO OF UNDERSTANDING REGARDING SHAREHOLDER AGR.
2ND AMENDMENT TO SALE CONTRACT
PROTOCOL AND JUSTIFICATION
PROTOCOL AND JUSTIFICATION
PROTOCOL AND JUSTIFICATION
STATEMENT RE: COMPUTATION
LIST OF SUBSIDIARIES
CERTIFICATION
CERTIFICATION
Table of Contents
TABLE OF CONTENTS
PART I
ITEM 1. Identity of Directors, Senior Management and Adviser
1
ITEM 2. Offer Statistics and Expected Timetable
1
ITEM 3. Key Information
1
ITEM 4. Information on the Company
10
ITEM 5. Operating and Financial Review and Prospects
61
ITEM 6. Directors, Senior Management and Employees
99
ITEM 7. Major Shareholders and Related Party Transactions
106
ITEM 8. Financial Information
114
ITEM 9. The Offer and Listing
121
ITEM 10.   Additional Information
125
ITEM 11.   Quantitative and Qualitative Disclosures About Market Risk
144
ITEM 12.   Description of Securities Other than Equity Securities
148
PART II
ITEM 13.   Defaults, Dividend Arrearages and Delinquencies
149
ITEM 14.   Material Modifications to the Rights of Security Holders and Use of Proceeds
149
ITEM 15.   Controls and Procedures
149
ITEM 16A.Audit Committee Financial Expert
150
ITEM 16B.Code of Ethics
150
PART III
ITEM 17.   Financial Statements
151
ITEM 18.   Financial Statements
151
ITEM 19.   Exhibits
151
Table of Contents
GLOSSARY OF CERTAIN PETROCHEMICAL TERMS
"
Acrylonitrile
" is an intermediate chemical product used in the production
of acrylic fibers, nitrylic rubber, ABS and SAN resins and acrylic paint.
"
Aromatics
" is a major group of organic chemical compounds, which are
hydrocarbons containing one or more benzene rings, typified by benzene, derived
chiefly from petroleum and coal tar, and used to make a broad range of
downstream chemical products.
"
Basic petrochemicals
" are the petrochemicals produced by crackers or
first generation producers, such as ethylene, propylene, butadiene, benzene,
toluene, xylene and other chemicals.
"
Benzene
" is an aromatic used to make phenol, chlorobenzene, styrene and
other chemicals.
"
Butadiene
" is a basic organic chemical used to make polybutadiene,
styrene-butadiene and neoprene rubbers, chlorobenzene and other chemicals.
"
Capacity
" means the annual output capacity of a given facility or, where
appropriate, the annual throughput capacity, calculated by estimating the
number of days in a year that such facility is expected to operate, deducting
downtime for regular maintenance, and multiplying that number by an amount
equal to the facility's optimal daily output or throughput, as the case may be.
"
Caprolactam
" or "
CPL
" is an intermediate chemical product used in the
production of nylon 6.
"
Crackers
" are Brazil's three first generation producers that transform or
"crack" naphtha and gas oil into basic petrochemicals, such as ethylene and
propylene.
"
Debottlenecking
" is the making of technical and operational improvements
in order to maximize the output and performance of a facility within the
existing limits of such facility.
"
DMT
" means dimethyl terephthalate and is an intermediate chemical product
used in the production of fibers or polyester resins.
"
EDC
" is an intermediate chemical product used in the production of PVC.
"
Ethylene
" is a basic organic chemical, mainly derived from thermal
cracking of feedstocks such as ethane, naphtha and gas oil, and is used to make
polyethylene and many other organic chemical intermediates, such as ethylene
dichloride, VCM, ethylene oxide and styrene.
"
Feedstocks
" are the major raw materials of a petrochemical plant.
"
First generation producer
" is a petrochemical cracker.
"
First generation petrochemicals
" are Basic Petrochemicals. See
definition of "Basic Petrochemicals" above.
"
Gasoil" or "Gas oil
" is an intermediate distillate product used as diesel
fuel, heating fuel and, sometimes, as feedstock.
"
HDPE
" means high density polyethylene.
"
Isoprene
" is a hydrocarbon compound with two unsaturated bounds and is
mainly used as a starting material for the manufacture of SIS.
"
LDPE
" means low density polyethylene.
(ii)
Table of Contents
"
LLDPE
" means linear low density polyethylene.
"
LPG
" means liquified petroleum gas.
"
MTBE
" means methyl tertiary butyl ether and is an additive used to
improve gasoline performance.
"
Naphtha
" is a by-product of crude oil refining which is used by the
crackers as a feedstock.
"
Olefin
" is a hydrocarbon such as ethylene or propylene, without benzene
rings and with a double bond connection between two carbon atoms.
"
Ortho-xylene
" is a feedstock used in the production of fibers and
polyester resins.
"
Oxidation
" is a chemical reaction in which a substance is combined with
oxygen.
"
Para-xylene
" is a feedstock used in the production of fibers and
polyester resins.
"
Polybutadiene
" is a polymer derived from the polymerization of butadiene
and is used to make synthetic rubber.
"
Polyethylene"
is a polymer derived from polymerization of ethylene and is
used to make various plastics, including film and sheet, piping and containers.
"
Polymer
" is a chemical compound or mixture of compounds formed by
polymerization and consisting essentially of repeating structural units
(monomers).
"
Polymerization
" is a chemical reaction in which two or more molecules
combine to form larger molecules that contain repeating structural units
(monomers).
"
Polypropylene (PP)
" is a polymer derived from the polymerization of
propylene and is used to make various plastics such as film and sheet, piping
and containers.
"
Polystyrene" or "(PS)
" is a thermoplastic resin used mainly to produce
disposable containers.
"
Propylene
" is a basic organic chemical, mainly derived from thermal
cracking of naphtha or from catalytic cracking of crude oil in refineries, used
to make polypropylene and many organic chemical intermediaries such as
propylene oxide, cumene and alcohols.
"
PVC
" means polyvinylchloride, a polymer derived from the polymerization
of VCM, and used to make various plastics for use in film, sheet, piping,
containers and other products.
"
Resin
" is a synthetic polymer such as polyethylene, polypropylene or PVC
made from a chemical reaction. The synthetic resin is the polymer itself, while
the "plastic" is the polymer plus additives such as colorants or plasticizer.
"
Second generation producer
" is a producer of intermediate petrochemical
products.
"
Second generation petrochemicals
" are the intermediate products generated
by the second generation producers, such as resins and fibers.
"
Third generation producer
" is a producer that transforms resins and other
intermediate products into end products.
"
Toluene
" is a liquid aromatic hydrocarbon.
"
VCM
" means vinylchloride monomer.
(iii)
Table of Contents
INTRODUCTION
All references herein (1) to "Braskem" or the "Company" are references to
Braskem S.A. and its consolidated subsidiaries, except where the context
indicates that such references are solely to Braskem S.A. and (2) to the
"Brazilian Government" are references to the federal government of the
Federative Republic of Brazil.
References to "
real
," "
reais
" or "R$" are to Brazilian
reais
(plural) and
to the Brazilian
real
(singular), the official currency of Brazil; and
references to "U.S. dollars," "dollars" or "U.S.$" are to United States
dollars.
Unless otherwise specified, metric units have been used,
e.g.
, tons refer
to metric tons.
Some of the figures included in this annual report have been rounded.
The Company has prepared its consolidated financial statements as of
December 31, 2002 and 2001 and for the three years ended December 31, 2002
included herein (the "Consolidated Financial Statements") in conformity with
generally accepted accounting principles in the United States ("U.S. GAAP").
CAUTIONARY STATEMENT WITH RESPECT TO FORWARD-LOOKING STATEMENTS
This Annual Report contains forward-looking statements. Some of the
matters discussed concerning the Company's business operations and financial
performance include forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended (the "Securities Act") and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
Statements that are predictive in nature, that depend upon or refer to
future events or conditions or that include words such as "expects,"
"anticipates," "intends," "plans," "believes," "estimates" and similar
expressions are forward-looking statements. Although the Company believes that
these forward-looking statements are based upon reasonable assumptions,
including projections of net sales, operating margins, earnings, cash flows,
research and development costs, working capital, capital expenditures and other
projections, these statements are subject to several risks and uncertainties
and are made in light of information currently available to the Company.
Accordingly, the Company cannot assure holders of its American Depository
Shares ("ADSs") that these statements will be achieved.
The Company's forward-looking statements will also be influenced by
factors such as:
•
general economic, political and business conditions in its markets,
both in Brazil and abroad, including the level of spending;
•
interest rate fluctuations, inflation and devaluation of the
real
in relation to the U.S. dollar;
•
the outcome of pending litigation;
•
competition;
•
its ability to obtain financing;
•
approval by Brazilian antitrust authorities of the corporate restructuring involving the Company; and
•
other factors discussed under "Item 3. Key Information—Risk Factors."
Holders of ADSs are cautioned that the Company's forward-looking
statements are not guarantees of future performance, and the actual results or
developments may differ materially from the expectations expressed in the
forward-looking statements.
(iv)
Table of Contents
As for the forward-looking statements that relate to future financial
results and other projections, actual results will be different due to the
inherent uncertainty of estimates, forecasts and projections and may be better
or worse than projected. Because of these uncertainties, holders of ADSs
should not place any reliance on these forward-looking statements. These
forward-looking statements also represent the Company's estimates and
assumptions only as of the date that they were made. The Company expressly
disclaims a duty to provide updates to these forward-looking statements, and
the estimates and assumptions associated with them, after the date of this
annual report to reflect events or changes in circumstances or changes in
expectations or the occurrence of anticipated events.
The Company undertakes no obligation to publicly update any
forward-looking statement, whether as a result of new information, future
events or otherwise. Holders of ADSs are advised, however, to consult any
additional disclosures the Company makes in its Form 6-K reports to the SEC.
Holders of ADSs should also note that the Company provides cautionary
discussions of risk and uncertainties under the caption "Risk Factors" in Item
3 of this Annual Report. These are factors that the Company believes could
cause its actual results to differ materially from expected results.
Additional factors besides those listed in Item 3 could adversely affect the
Company.
(v)
Table of Contents
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISER
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
Selected Financial Data
The following table presents selected financial information for the
Company at the dates and for each of the years indicated. The selected
financial information set forth below has been derived from financial
statements of the Company prepared in accordance with U.S. GAAP. The selected
financial data as of December 31, 2002 and 2001 and for each of the three years
ended December 31, 2002 have been derived from, and should be read in
conjunction with, the Consolidated Financial Statements included in this Annual
Report. The selected financial data as of December 31, 2000, 1999 and 1998 and
for each of the two years in the period ended December 31, 1999 have been
derived from audited financial statements of the Company that are not included
elsewhere in this Annual Report. This information should be read in
conjunction with "Item 5. Operating and Financial Review and Prospects" and is
qualified in its entirety by reference to the Consolidated Financial Statements
and the notes thereto appearing elsewhere herein.
As at and for the year ended December 31,
2002
2001
2000
1999
1998
(in millions of U.S. dollars, except
per thousand shares and per ADS amounts)
Statements of operations data
Net sales
U.S.$
2,391.1
U.S.$
1,771.9
U.S.$
1,555.1
U.S.$
1,011.5
U.S.$
1,039.0
Cost of sales
(1,901.0
)
(1,447.2
)
(1,252.4
)
(719.0
)
(804.1
)
Gross profit
490.1
324.7
302.7
292.5
234.9
Operating income
522.2
244.1
225.7
236.3
174.3
Financial income
167.9
80.4
94.9
102.2
87.4
Financial expenses
(1,159.8
)
(294.6
)
(134.0
)
(220.2
)
(173.0
)
Other non-operating income (expenses)
(57.3
)
(26.3
)
(2.5
)
(9.7
)
(0.1
)
Income (loss) before income tax, equity in
earnings of affiliates, minority interest, change
in accounting principle and income from
discontinued operations
(527.1
)
3.6
184.1
108.7
88.6
Income tax (expense) benefit
Current
(25.5
)
13.9
(0.3
)
(1.3
)
(0.8
)
Deferred
5.0
0.5
(2.6
)
(3.1
)
15.6
Equity in earnings of affiliates, net
22.5
(6.1
)
6.9
0.6
(1.5
)
Minority interest
65.0
(63.8
)
0.0
(1.0
)
(0.7
)
Income (loss) before change in accounting
principle and income loss from discontinued
operations
(460.0
)
(52.0
)
188.1
103.9
101.1
Cumulative effect of change in accounting principle
—
1.8
—
—
—
Income (loss) from discontinued operations(1)
—
—
—
14.9
(0.2
)
1
Table of Contents
As at and for the year ended December 31,
2002
2001
2000
1999
1998
(in millions of U.S. dollars, except
per thousand shares and per ADS amounts)
Net income (loss)
U.S.$
(460.0
)
U.S.$
(50.2
)
U.S.$
188.1
U.S.$
118.8
U.S.$
100.9
Income applicable to:
Preferred Class A shares
—
—
119.2
75.7
64.0
Preferred Class B shares
—
—
0.3
0.4
Common shares
(460.0
)
(50.2
)
68.6
43.1
36.5
Basic and diluted earnings (losses) per thousand
shares:
Preferred Class A shares
—
—
106.10
66.57
56.42
Preferred Class B shares
—
—
21.12
22.53
33.34
Common shares
(0.38
)
(0.06
)
106.10
66.57
56.42
Earnings (losses) per ADS (2)
5.31
3.33
2.82
Balance sheet data
Cash and cash equivalents
U.S.$
35.5
U.S.$
109.2
U.S.$
18.5
U.S.$
70.9
U.S.$
42.0
Property, plant and equipment, net
1,183.7
1,758.6
989.9
1,072.8
1,615.7
Total assets
2,935.0
3,703.2
1,915.4
1,998.2
2,584.5
Current portion of long-term debt
413.0
578.8
177.8
170.8
225.2
Long-term debt, net of current portion
1,058.7
1,216.0
439.9
521.1
635.6
Shareholders'
equity (deficit)
(362.4
)
195.4
1,171.7
1,160.8
1,555.3
Other financial information
Net cash provided by (used in):
Operating activities
U.S.$
429.6
U.S.$
124.4
U.S.$
166.6
U.S.$
225.5
U.S.$
227.0
Investing activities
(217.2
)
(118.5
)
(65.9
)
(137.8
)
(39.6
)
Financing activities
(191.1
)
91.2
(149.8
)
(55.1
)
(220.6
)
Capital expenditures
(115.5
)
(146.3
)
(58.4
)
(24
)
(66
)
(1)
Income from discontinued operations includes equity in discontinued
operations and result from sale of assets.
(2)
Earnings per ADS have been calculated on the basis that each ADS
represents 50 preferred class A shares. Earnings per ADS is calculated by
reference to the income available to preferred class A shares and the
weighted average number of preferred class A shares outstanding during
each period.
Exchange Rates
There are two principal legal foreign exchange markets in Brazil:
•
the commercial rate exchange market; and
•
the floating rate exchange market.
On January 25, 1999, the Brazilian government announced the unification of
the operational limits applicable to both markets. However, each market
continues to have a specific regulation. Most trade and financial
foreign-exchange transactions are carried out on the commercial rate exchange
market. Foreign currencies may only be purchased through a Brazilian bank
authorized to operate in these markets. In both markets, rates are freely
negotiated but may be strongly influenced by the intervention of the Central
Bank of Brazil (the "Central Bank").
From March 1995 through January 1999, the
real
gradually devalued against
the U.S. dollar. In January 1999, the Central Bank abolished the band system
and allowed the
real
/U.S. dollar exchange rate to float freely. Since then,
the
real
/U.S. dollar exchange rate has been established mainly by the interbank
market and has fluctuated considerably. From December 31, 1998 through April
30, 2003, the U.S. dollar appreciated by approximately 139.1% against
the
real
.
The Central Bank has only intervened occasionally to control unstable
movements in the foreign exchange rate. The Company cannot predict, however,
whether the Central Bank will continue to let the
real
float freely, or if in
the future, the
real
will remain at its present level or devalue further.
2
Table of Contents
The following table shows the commercial selling rate for U.S. dollars for
the periods and dates indicated. The information in the "Average" column
represents the average of the exchange rates on the last day of each month
during the years presented.
Year
High
Low
Average
Period End
2002
3.955
2.271
2.998
3.533
2001
2.800
1.935
2.353
2.320
2000
1.985
1.723
1.835
1.956
1999
2.165
1.208
1.851
1.789
1998
2.209
1.117
1.164
1.209
Source:
Central Bank
Month
High
Low
December 2002
3.798
3.428
January 2003
3.662
3.276
February 2003
3.658
3.483
March 2003
3.564
3.353
April 2003
3.336
2.890
May 2003
3.028
2.865
Source:
Central Bank
As of June 23, 2003, the U.S. dollar-
real
exchange rate was R$2.879 per
U.S.$1.00.
Risk Factors
Risks Relating to Brazil
The Brazilian government exercises influence over the Brazilian economy, and
Brazilian and economic conditions have a direct effect on the Company and its
financial performance
The Brazilian economy has been characterized by frequent and occasionally
extensive intervention by the Brazilian government and unstable economic
cycles. The Brazilian government has often changed monetary, taxation, credit,
tariff and other policies to influence the course of Brazil's economy. The
Brazilian government's actions to control inflation and effect other policies
have at times involved wage and price controls, as well as other
interventionist measures, such as blocking access to bank accounts, imposing
capital controls and limiting imports into Brazil. The Company has no control
over, and cannot predict, what measures or policies the Brazilian government
may take in the future. The Company's operations and financial condition may
be adversely affected by factors, including, without limitation:
•
fluctuations in exchange rates;
•
interest rates;
•
inflation;
•
exchange control policies;
•
tax policies;
3
Table of Contents
•
GDP growth;
•
social instability;
•
liquidity of domestic capital and lending markets; and
•
other political, diplomatic, social and economic developments in or affecting Brazil.
Luiz Inácio Lula da Silva of the Labor Party took office as President of
Brazil on January 1, 2003. While President da Silva's government has adopted
economic measures that are more conservative than expected by some observers,
there is no certainty that these policies will continue or that President da
Silva will continue to pursue economic stabilization and liberalization
policies. The Company cannot predict what future fiscal, monetary, social
security and other policies will be adopted by Mr. da Silva's administration
and whether these policies will result in adverse consequences to the economy
and to the Company's business, results of operations or financial condition.
The Brazilian government's actions to combat inflation may contribute
significantly to economic uncertainty in Brazil and may adversely affect the
market price of the Preferred Shares and ADSs
Historically, Brazil experienced high rates of inflation. Inflation
itself, as well as government efforts to combat inflation, had significant
negative effects on the Brazilian economy. Inflation, actions to combat
inflation and public speculation about possible future actions also contributed
materially to economic uncertainty in Brazil and to heightened volatility in
the Brazilian securities markets.
Inflation rates, as measured by the
Índice Geral de Preços –
Disponibilidade Interna
(the General Price Index – Internal Availability, or
IGP-DI) were approximately 1.7%, 20.0%, 9.8%, 10.4% and 26.4% in 1998, 1999,
2000, 2001 and 2002, respectively.
Brazil may again experience high levels of inflation in the future.
Increasing prices for petroleum, the devaluation of the
real
and future
governmental actions, including further actions taken to attempt to maintain
the value of the
real
, may trigger increases in inflation. Periods of higher
inflation may have a material adverse effect on the Brazilian economy, the
Brazilian financial markets and the market price of the Company's preferred
shares (the "Preferred Shares") and the ADSs. High inflation may also have a
material adverse effect on the Company's business, financial condition and
operations, especially if that inflation dampens demand for the Company's
products.
A devaluation of the real could adversely affect the Brazilian economy and the
Company's ability to service its foreign currency-denominated debt and could
lead to a decline in the market price of the Preferred Shares and ADSs
The exchange rate between the
real
and the U.S. dollar and the relative
rates of
real
devaluation and inflation have affected the Company's financial
results and may continue to do so in the future.
The Brazilian currency has been devalued frequently during the last four
decades. Throughout this period, the Brazilian government has implemented
various economic plans and used various exchange rate policies, including
sudden devaluations, periodic mini-devaluations (during which the frequency of
adjustments has ranged from daily to monthly), exchange controls, dual exchange
rate markets and a floating exchange rate system. 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 in value against the U.S. dollar by 8.5% in 2000, 15.7% in 2001 and
34.3% in 2002.
Devaluation of the
real
relative to the U.S. dollar could create
additional inflationary pressures in Brazil by generally increasing the price
of imported products and requiring recessionary government policies to curb
aggregate demand. On the other hand, appreciation of the
real
against the U.S.
dollar may lead to a deterioration of the country's current account and the
balance of payments, as well as dampen export-driven growth.
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Although the Company manages a portion of its exchange rate risk through
foreign currency derivative instruments, a significant devaluation of the
real
in relation to the U.S. dollar or other currencies could adversely affect the
Company's ability to pay the its foreign currency-denominated obligations, and
to pay financial expenses on that debt, particularly as the Company's revenues
are based primarily in
reais
. The Company had total foreign currency
denominated obligations in an aggregate amount equal to approximately U.S.$1.41
billion at March 31, 2003.
Brazilian government exchange control policies could adversely affect the
Company's ability to service its foreign currency-denominated debt
The purchase and sale of foreign currency in Brazil is subject to
governmental control. In the past, the Central Bank has centralized certain
payments of principal on external obligations.
Many factors could cause the Brazilian government to institute a more
restrictive exchange control policy, including, without limitation, the extent
of Brazil's foreign currency reserves, the availability of sufficient foreign
exchange on the date a payment is due, the size of Brazil's debt service burden
relative to the economy as a whole, Brazil's policy towards the International
Monetary Fund, or IMF, and political constraints to which Brazil may be
subject. A more restrictive policy could affect the ability of Brazilian
debtors (including the Company) to make payments outside of Brazil to meet
foreign currency obligations under foreign currency-denominated liabilities.
Events in other emerging markets and the Brazilian government's monetary
policies may adversely affect the availability of credit
External events have from time to time resulted in considerable outflows
of funds and declines in the aggregate amount of foreign investment in Brazil.
Such events include the Asian economic crisis of 1997, the Russian currency
crisis of 1998, the currency instability that Brazil encountered in 1999, the
ongoing economic crisis in Argentina and the market uncertainty before the
election of President da Silva. To defend the value of the
real
during such
events and to control inflation, the Brazilian government has maintained a
tight monetary policy with associated high interest rates and has constrained
the growth of credit and the economy. These disruptions in the Brazilian
economy could adversely affect the ability of the Company's customers to make
timely payments to the Company and could adversely affect its ability to obtain
credit in Brazil and maintain its liquidity.
Risks Relating to The Company
The Company's indebtedness will require that a significant portion of its cash
flow be used to pay the principal and interest with respect to that
indebtedness
As a result of the corporate reorganization that led to the formation of
the Company, the Company had approximately U.S.$2.1 billion of total
indebtedness as at December 31, 2002. The Company had consolidated negative
working capital of U.S.$594.7 million at December 31, 2002, principally as a
result of its outstanding short-term indebtedness and the current portion of
its long-term debt. Part of the Company's debt strategy over the next several
years involves the Company's use of a substantial portion of its consolidated
cash flow (including from synergies resulting from the mergers that formed part
of the Company's consolidation and possibly from the sale of certain non-core
assets) to pay principal and interest with respect to this indebtedness. The
Company is also attempting to extend the average maturity of its outstanding
indebtedness, including by repaying short-term debt through longer-term
borrowings and issuing longer-term debt securities. Any failure by the Company
to refinance indebtedness coming due during the next 12-18 months that it does
not repay using cash flow generated from its operations and from the sale of
non-core assets would adversely affect the Company and its financial condition.
The level of its indebtedness could have important consequences to holders
of ADSs, including the following:
•
the Company's ability to obtain any necessary financing in the
future for working capital, capital expenditures, debt service
requirements or other purposes could be limited;
5
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•
a substantial portion of the Company's cash flow from operations,
if any, must be dedicated to the payment of principal and interest on
the Company's indebtedness and may not be available for other purposes;
•
the Company's level of indebtedness could limit its flexibility in
planning for, or reacting to changes in, its business; and
•
the Company's level of indebtedness could make the Company more
vulnerable in the event of a downturn in its business.
The cyclical nature of the petrochemical industry may adversely affect the
Company's results of operations
The Brazilian petrochemical industry, including the markets in which the
Company competes, is cyclical and sensitive to changes in supply and demand
that are in turn affected by political and economic conditions in Brazil and
elsewhere. This cyclicality may adversely affect the Company's financial
performance. In particular:
•
downturns in general business and economic activity may cause
demand for the Company's products to fall;
•
when demand falls, the Company may be under competitive pressure to
lower its prices; and
•
if the Company decides to expand its plants or construct new
plants, it may do so based on an estimate of future demand that
materializes at levels lower than the Company predicted.
The global petrochemical industry is also cyclical. Historically, the
international petrochemical markets have experienced alternating periods of
limited supply, which have caused prices and profit margins to increase,
followed by capacity additions, which have resulted in oversupply and declining
prices and profit margins. The Brazilian petrochemical industry is becoming
more integrated with the global petrochemical industry for a number of reasons,
including increased demand for, and consumption of, these products in Brazil
and the ongoing integration of regional and world markets for commodity
products. In addition, the Company's prices in Brazil are related to price
trends in the global markets.
The Company faces competition from producers of polyethylene, polypropylene,
vinyls and other petrochemical products
The Company faces competition from other producers of petrochemicals in
Brazil and abroad, and prices for many of the Company's products are determined
with reference to international market prices for these products. The Company
anticipates that it may experience increasingly intense competition from
international producers, both in Brazil and in selected foreign markets in
which the Company plans to attempt to increase sales of its
polyolefins
products. For example, Dow Chemical ("Dow Chemical") recently built a linear
low density polyethylene facility in Bahía Blanca, Argentina, which became
operational in 2001 with an annual capacity of 210,000 tons. In addition, Rio
Polímeros, a Brazilian petrochemical company is constructing a petrochemical
plant in Duque de Caxias, Rio de Janeiro, with an announced projected annual
capacity of 520,000 tons of ethylene, 75,000 tons of propylene and 540,000 tons
of linear low density polyethylene and high density polyethylene, which will
increase Brazilian annual production capacity of polyethylene by approximately
35%. In the vinyls market, the Company's primary competitor is Solvay Indupa
do Brasil S.A. ("Solvay"), with an installed annual PVC production capacity of
250,000 tons and production facilities closer to the primary PVC market in
Brazil than the Company's production facilities. In the domestic PET market,
the company competes with importers and Rhodia – ster S.A.,
("Rhodia") which has an
installed PET and fiber-related annual production capacity of 290,000 tons,
more than four times larger than the Company's annual PET capacity.
The Company also competes with producers of imported petrochemical
products. Many of the Company's foreign competitors are larger and have
greater financial, manufacturing, technological and marketing resources than
the Company.
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Future adjustments in tariffs on imports that compete with its products could
cause the Company to lower its prices
One of the factors that the Company takes into consideration when setting
the prices for its products is the tariff rates imposed by the Brazilian
government on imports of similar products and the products of the Company's
customers. The Brazilian government has from time to time used import and
export tariffs to effect economic policies, with the consequence that tariffs
can vary considerably, especially tariffs on petrochemical products. Future
adjustments of tariffs could force the Company to lower its prices and could
have a material adverse effect on the Company's results of operations.
The Company may face conflicts of interest in transactions with certain related
parties
The Company maintains trade accounts receivable and current and long-term
payables with some of its affiliates, including COPESUL – Companhia
Petroquímica do Sul ("Copesul") in the petrochemical complex located in Triunfo
in the State of Rio Grande do Sul (the "Southern Complex") (which supplies the
Company with ethylene and propylene), Petróleo Brasileiro S.A. – PETROBRAS
("Petrobras") (which supplies the Company with naphtha) and
Politeno Indústria e Comércio S.A. ("Politeno")(which
purchases ethylene from the Company). Through Petrobras Química S.A.
("Petroquisa"), Petrobras, a petroleum company controlled by the Brazilian
government, is the indirect holder of 8.1% of the Company's common shares and
11.3% of its total capital stock. These accounts receivable and accounts
payable balances result mainly from purchases and sales of goods and services,
which are at prices and on terms equivalent to the average terms and prices of
transactions that the Company enters into with third parties. Commercial and
financial transactions between the Company and these affiliates could result in
conflicting interests.
Some of the Company's shareholders may have the ability to influence the
outcome of corporate actions or decisions, which could affect the holders of
ADSs
The Odebrecht Group directly holds approximately 44.6% of the Company's
voting common stock, and its designees currently constitute a majority of the
members of the Company's Board of Directors (the "Odebrecht Group"). In
addition, some of the Company's other shareholders, consisting of Petroquisa
and two Brazilian pension funds, have veto and other rights under shareholders
agreements as described under "Item 7. Major Shareholders—Shareholders Agreements."
As a result, the Odebrecht Group and these other shareholders may have the
ability to influence the outcome of some major corporate actions or decisions
requiring the approval of the Company's shareholders or its Board of Directors,
which could affect the holders of the ADSs.
The Company may be adversely affected by high naphtha costs
Naphtha is the principal raw material of the Company's Basic Petrochemical
Unit. In 2002, naphtha accounted, directly and indirectly, for approximately
66% of the Company's consolidated cost of sales and represented approximately
90% of the total variable costs of the Basic Petrochemicals Unit. The price of
naphtha supplied by Petrobras is linked to Amsterdam-Rotterdam-Antwerp ("ARA")
quotations of naphtha and to the U.S. dollar-
real
exchange rate.
During 2002, the price of naphtha increased by approximately 56%, from
U.S.$168 per ton in January 2002 to U.S.$263 per ton on December 31, 2002, and
reached a record high of U.S.$268.9 per ton in November 2002, due primarily to
the threat of war between the United States and Iraq. Combined with the
appreciation of the U.S. dollar against the
real
during 2002 of approximately
52%, the price of naphtha in
reais
increased by approximately 106% during 2002.
Although the average monthly price of naphtha decreased by 25.3% during the
first three months of 2003, from U.S.$294.9 in January 2003 to U.S.$269.6 in
March 2003, and the U.S. dollar depreciated against the
real
between January 1,
2003 and May 31, 2003, the price of naphtha may increase significantly or the
real
may devalue significantly in the future. Although the majority of the
Company's revenues are in
reais
, the Company does not currently hedge its
exposure to changes in the price of naphtha, in part because a portion of its
sales in 2002 were exports payable in foreign currencies and the prices of its
polyethylene, polypropylene and PVC generally reflect changes in the
international market prices of these products. In periods of high volatility
in the U.S. dollar-
real
exchange rate, there is usually a lag between the time
that the U.S. dollar appreciates and the time
that the Company can effectively pass on such increased cost in
reais
to
its customers in Brazil. Accordingly, if the
real
depreciates precipitously
against the U.S. dollar in the future, the Company may not immediately be able
to pass on all of the corresponding increases in its naphtha costs to its
customers in Brazil, which could materially adversely affect its results of
operations and financial condition.
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One company supplies Braskem with a significant amount of its naphtha needs
Currently, Petrobras is the only Brazilian supplier of naphtha and
supplies the majority of the naphtha consumed by producers of basic
petrochemicals in Brazil, including the Company. Petrobras produces some of
the naphtha it sells to the Company and imports the balance. Significant
damage to Petrobras's refining operations or to the port facilities through
which Petrobras imports naphtha, which refining operations and port facilities
are located in several different parts of Brazil, or to any of the pipelines
connecting the Company to Petrobras's facilities, whether as a consequence of
an accident, natural disaster, fire or otherwise, could adversely affect the
Company's operations.
The Company manufactures products that are subject to the risk of fire
explosions and other hazards
The Company's operations are subject to the usual hazards, such as fires,
explosions and other accidents, associated with the manufacture of
petrochemicals and the storage and transportation of feedstocks and products.
These hazards can cause personal injury and loss of life, severe damage to or
destruction of property and equipment and environmental damage and may result
in suspension of operations. Although the Company maintains insurance coverage
for losses due to fire damage and for losses of income resulting from stoppages
due to fire, explosion or electrical damage, those insurance proceeds may not
be available on a timely basis.
The Company's business is subject to stringent environmental regulations and
additional or more restrictive regulations could adversely affect the Company
Brazilian petrochemical producers, including the Company, are subject to
stringent federal, state and local environmental laws and regulations
concerning human health, the handling and disposal of solid and hazardous
wastes and discharges of pollutants into the air and water. Petrochemical
producers are also sometimes subject to unfavorable market perceptions of the
environmental impact of their business, which can have an adverse effect on
their results of operations. In view of the possibility of unanticipated
regulatory or other developments, particularly as environmental laws become
more stringent in Brazil and worldwide, the amount and timing of future
expenditures required to maintain compliance could vary substantially from
their current levels and could adversely affect the availability of funds to
the Company for other capital expenditures and other purposes. See "Item 4.
Information on the Company – Environmental Matters."
The Company may be adversely affected by any future adverse decision of the
Brazilian antitrust authorities concerning its recent corporate restructuring
As part of its corporate restructuring process that began in 2001, the
Company acquired the operations of OPP Química S.A. ("OPP Química"), Trikem
S.A. ("Trikem"), Proppet S.A. ("Proppet"), Polialden Petroquímica S.A.
("Polialden") and Nitrocarbono S.A. ("Nitrocarbono"). In accordance with
Brazilian Law, the Company submitted the terms and conditions of the
transactions consummated in the July 25, 2001 auction of
petrochemical assets to the Brazilian antitrust authorities
on September 18, 2001. These authorities will determine whether these
transactions negatively impact competitive conditions in the relevant markets
in which the Company competes or whether they would negatively affect
consumers. The Company supplemented its submission to the Brazilian antitrust
authorities in order to update these authorities concerning the additional
steps that the Company took in its corporate restructuring process after
September 2001. Brazilian antitrust law does not prevent parties from closing
a transaction on a provisional basis until the Brazilian antitrust authorities
render a final decision. However, if approved, the effectiveness of the merger
is retroactive to the date on which the transaction closed. Although two of
three Brazilian antitrust authorities issued non-binding opinions in July 2002
and May 2003, respectively, recommending true unconditional approval of these
corporate restructuring transactions, the third and governing antitrust
authority is still reviewing this matter and may not agree with these opinions
and may not approve these transactions unconditionally. Any action by the
Brazilian antitrust authorities to impose conditions or performance commitments
on the Company
could materially adversely affect its business, results of operations,
financial condition and prospects. See "Item 4. Information on the Company –
Antitrust Matters."
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The Company may be adversely affected by the unfavorable outcome of pending
litigation
The Company is involved in a substantial number of tax, civil and labor
disputes. In addition, the Company has challenged the application of Brazilian
federal income (social contribution) taxes to its operations and federal excise
taxes to purchases of ethylene and propylene by its Polyolefins Unit and its
Vinyls Unit. Based on the opinion of the Company's Brazilian counsel, the
Company has not made any provision in its consolidated financial statements for
these unpaid taxes or in respect of a civil lawsuit filed against the Company
by some of its class B preferred shareholders. The Company may not prevail in
these proceedings, or it may have to pay significant amounts, including
penalties and interest, to the Brazilian government in the future as payment
for the Company's liabilities, which could adversely impact its business,
results of operations, financial condition and prospects.
Risk Factors Relating to the Preferred Shares and ADSs
The Preferred Shares and ADSs generally do not have voting rights
In accordance with Law No. 6,404/76 and Law No. 10,303/2001 (together, the
"Brazilian Corporate Law") and the Company's bylaws, holders of the preferred
shares and consequently the ADSs are not entitled to vote at meetings of the
Company's shareholders, except in very limited circumstances. This means,
among other restrictions, that preferred shareholders are not entitled to vote
to approve corporate transactions, including mergers or consolidations of the
Company with other companies. See "Item 10. Additional Information –
Description of the Company's Bylaws – Voting Rights – Voting Rights of the
Preferred Shares."
Exchange controls and restrictions on remittances abroad may adversely affect
holders of ADSs
The Brazilian custodian for the Preferred Shares must obtain a certificate
of registration from the Central Bank of Brazil to remit U.S. dollars abroad
for payments of dividends, any other cash distributions, or upon the
disposition of the shares and sales proceeds related thereto. If a holder of
ADSs decides to exchange its ADSs for the underlying Preferred Shares, such
holder will be entitled to continue to rely, for five business days from the
date of exchange, on the depositary's certificate of registration. Thereafter,
such holder may not be able to obtain and remit U.S. dollars abroad upon the
disposition of the Preferred Shares, or distributions relating to the Preferred
Shares, unless such holder obtains its own certificate of registration with the
Central Bank or qualifies under Resolution No. 2,689/00 of the
Conselho
Monetário Nacional
(the National Monetary Council or CMN), which entitles
qualified foreign investors to buy and sell securities on the Brazilian stock
exchanges without obtaining a separate certificate of registration.
The relative volatility and liquidity of the Brazilian Securities Markets may
adversely affect holders of ADSs
Investing in securities, such as the Preferred Shares or ADSs, involving
emerging market risk, including risks relating to Brazil, involves a higher
degree of risk than investments in securities of issuers from more developed
countries, and such investments are generally considered speculative in nature.
Investments involving risks relating to Brazil, such as the Preferred Shares
and the ADSs, are subject to certain economic and political risks, including,
without limitation, changes in the regulatory, tax, economic and political
environment that may affect the ability of investors to receive payment, in
whole or in part, in respect of their investments and restrictions on foreign
investment and on repatriation of capital invested.
The Brazilian securities markets are substantially smaller, less liquid
and more volatile than major securities markets in the United States. These
factors may substantially limit the ability of holders of ADSs to sell the
Preferred Shares underlying their ADSs at a price and at a time at which
holders of ADSs wish to do so. The
Bolsa de Valores de São Paulo
(the "São
Paulo Stock Exchange", or "BOVESPA"), which is the principal Brazilian stock
exchange, had a market capitalization of approximately U.S.$124.0 billion as of
December 31, 2002 and an average daily trading volume of approximately
U.S.$190.7 million for 2002. In comparison, the New York Stock Exchange
had a market capitalization of U.S.$13.4 trillion as of December 31, 2002
and an average daily trading volume of approximately U.S.$40.9 billion for
2002.
9
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There is also significantly greater concentration in the Brazilian
securities markets. The 10 largest companies in terms of market capitalization
represented approximately 46% of the aggregate market capitalization of the
BOVESPA as of December 31, 2002. The 10 most widely traded stocks in terms of
trading volume accounted for approximately 55.4% of all shares traded on the
BOVESPA in 2002. See "Item 9. The Offer and Listing –Trading on the Brazilian
Stock Exchanges."
The Company's corporate affairs are governed by the Company's bylaws and
the Brazilian Corporate Law, which differ in certain respects from the legal
principles that would apply if the Company were incorporated in a jurisdiction
in the United States, such as Delaware or New York, or in certain other
jurisdictions outside Brazil. In addition, rights of holders of ADSs or of the
Preferred Shares under the Brazilian Corporate Law to protect their interests
relative to actions taken by the Company's Board of Directors or common
shareholders may be fewer and less well-defined than under the laws of those of
other jurisdictions outside Brazil.
Holders of ADSs may not be able to exercise the preemptive rights relating
to the Preferred Shares underlying their ADSs unless a registration statement
under the Securities Act is effective with respect to those rights or an
exemption from the registration requirements of the Securities Act is
available. The Company is not obligated to file a registration statement with
respect to the shares relating to these preemptive rights, and the Company
cannot assure holders of ADSs that the Company will file any such registration
statement. Unless the Company files a registration statement or an exemption
from registration applies, holders of ADSs may receive only the net proceeds
from the sale of their preemptive rights by the depositary or, if the
preemptive rights cannot be sold, such rights may lapse.
Developments in other emerging markets may adversely affect the market price of
the Preferred Shares and ADSs
The market price of the Preferred Shares and the ADSs may be adversely
affected by declines in the international financial markets and world economic
conditions. Although economic conditions are different in each country,
investors' reaction to developments in one country can affect the securities
markets and the securities of issuers in other countries, including Brazil.
Brazilian securities markets are, to varying degrees, influenced by economic
and market conditions in other emerging market countries, especially those in
Latin America. The economic recession in Argentina, Brazil's largest trading
partner in Latin America, continues to adversely affect Brazil. An escalation
of the ongoing economic turmoil in Argentina, as well as adverse economic
developments in other emerging markets (
i.e.
, the Asian economic crisis of 1997
and the 1998 Russian debt moratorium and devaluation of the Russian currency),
may adversely affect investor confidence in securities issued by Brazilian
companies, causing their market price and liquidity to suffer and, more
directly, may affect the Company's financial condition, its ability to raise
capital when needed and the market price of the Preferred Shares and the ADSs.
ITEM 4. INFORMATION ON THE COMPANY
History and Development of the Company
Braskem S.A. is a
sociedade anônima
(corporation) organized under the laws
of Brazil for the purpose of manufacturing, trading, importing and exporting
chemical and petrochemical products and fuels, as well as producing and
supplying steam, water, compressed air and electric power to companies
operating in the Camaçari Petrochemical Complex in Bahia, Brazil (the
"Northeastern Complex"), and the rendering of services to those companies.
Braskem is the new corporate name of Copene Petroquímica do Nordeste S.A.
("Copene"). The current organizational structure of the Company is the result
of a significant corporate restructurings undertaken in Brazil, integrating six
major Brazilian petrochemical companies: Copene; OPP Química; Trikem; Proppet;
Nitrocarbono and Polialden.
Copene was founded in 1972 as Petroquímica do Nordeste Copene Ltda. for
the purpose of planning, executing and coordinating the activities of the
Northeastern Complex. The construction of the Northeastern Complex formed part
of a Brazilian federal government development policy implemented in the early
1970s to diversify the
geographical distribution of industrial assets to promote economic growth
across different regions in Brazil. At that time, the only petrochemical
complex in Brazil was located in the State of São Paulo. On June 18, 1974,
Copene was duly incorporated as a
sociedade anônima
(corporation) under the
laws of Brazil and renamed Copene
10
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Petroquímica do Nordeste S.A. Since 1978,
when Copene commenced operations, the Company has grown to become the largest
basic petrochemicals company in Brazil and Latin America.
Acquisition of Control by Norquisa
Prior to August 1995, Petroquisa, the petrochemical affiliate of
Petrobras, owned 36.2% of the total capital of Copene, representing 48.2% of
the voting capital of Copene. Petrobras historically provided all of the
Company's requirements of naphtha, its principal raw material. In August 1995,
as part of the Brazilian government's privatization program, Petroquisa sold
14.8% of the total capital of Copene, representing 32.8% of its voting capital,
through an auction. Nordeste Química S.A. - Norquisa ("Norquisa"), a company
owned by petrochemical producers located in the Northeastern Complex, acquired
a portion of the shares sold in the auction, and the remainder was acquired by
various Brazilian pension funds. Each of the shareholders of Norquisa
purchased basic petrochemical products and utilities from Copene under
long-term contracts. At the time of this auction, the shareholders of Norquisa
were:
•
Participações Petroquímicas do Nordeste Ltda. ("Petronor"), which
held 23.7% of the voting stock of Norquisa. Petronor was a wholly
owned subsidiary of Polialden, which was controlled by Conepar -
Companhia Nordeste de Participações ("Conepar").
•
Pronor Petroquímica S.A. ("Pronor"), which held 16.0% of the voting
stock of Norquisa. Pronor is a wholly owned subsidiary of Petroquímica
da Bahia S.A. ("PQBA"), a member of a group of companies controlled by
the Mariani family (the "Mariani Group").
•
Trikem, which held 16.0% of the voting stock of Norquisa. Trikem
was controlled at that time by Odebrecht S.A. ("ODB"), the holding
company of the Odebrecht Group.
•
Politeno, which held 12.5%
of the voting stock of Norquisa. The principal shareholders of
Politeno at that time were Conepar, PSQ Investimentos e Participações
Ltda. ("Suzano"), Sumitomo Chemical Company Limited ("Sumitomo
Chemical") and Itochu Corporation ("Itochu").
•
EDN - Estireno do Nordeste S.A. ("EDN"), which held 12.5% of the
voting stock of Norquisa. EDN is controlled by Dow Chemical.
•
Oxiteno do Nordeste S.A. ("Oxiteno"), which held 10.4% of the
voting stock of Norquisa. Oxiteno is controlled by Ultrapar
Participações S.A.
•
Polipropileno S.A. ("Polipropileno"), which held 8.9% of the voting
stock of Norquisa. Polipropileno is controlled by Suzano.
Following this auction, 58.4% of Copene's voting capital was owned by
Norquisa, 1.7% was owned by Odebrecht Química S.A., a member of the Odebrecht
Group ("Odequi"), 15.4% was owned by Petroquisa, 5.8% was owned by Previ –
Caixa de Previdência dos Funcionários do Banco do Brasil, the pension fund of
Banco do Brasil ("Previ"), 5.7% was owned by Fundação Petrobras de Seguridade
Social – Petros, the pension fund of Petrobras ("Petros"), and the remainder
was owned by various other Brazilian pension funds and by several private
investors.
The Econômico S.A. Empreendimentos Auction
In 1995, Banco Econômico S.A., a Brazilian financial institution ("Banco
Econômico"), collapsed and the Central Bank intervened. At the time of Banco
Econômico's collapse, Banco Econômico owned 56.3% of the capital stock,
representing 63.8% of the voting stock, of Conepar. The other shareholders of
Conepar were:
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Table of Contents
•
Intercapital Comércio e Participações Ltda. ("Intercapital"), a
company controlled by the Odebrecht Group and the Mariani Group, which
held 31.9% of the capital stock, representing 36.2% of the voting
stock, of Conepar; and
•
BNDES Participações S.A. – BNDESPAR ("BNDESPAR," the holding
company of the Brazilian National Bank for Economic and Social
Development or BNDES), which owned 11.8% of the capital stock of
Conepar.
Conepar, in turn, owned:
•
less than 1.0% of the voting stock of Norquisa;
•
35.0% of the voting stock, representing 31.0% of the capital stock,
of Politeno, a producer of thermoplastic resins; and
•
66.7% of the voting stock, representing 42.6% of the capital stock,
of Polialden, a producer of thermoplastic resins.
As part of an effort to restructure and reconsolidate the petrochemical
sector in Brazil, the Central Bank, as liquidator of Banco Econômico, conducted
an auction (the "Auction") on July 25, 2001 to sell Econômico S.A.
Empreendimentos ("ESAE"), a company formed to hold the capital stock of Conepar
that was owned by Banco Econômico. In the Auction, Nova Camaçari Participações
S.A. ("Nova Camaçari"), an entity formed by the Odebrecht Group with the
specific purpose of participating in the Auction, acquired ESAE.
Under the terms of the Auction, Nova Camaçari was obligated to comply with
the shareholders' agreement of Conepar and the tag-along rights of Banco
Econômico, ESAE, Odequi, Trikem, PQBA, Nitrocarbono, Pronor, Companhia
Brasileira de Poliuretanos, Conepar and Intercapital. Members of the Odebrecht
Group and of the Mariani Group exercised their tag-along rights with respect to
their shares of Intercapital, and BNDESPAR exercised its tag-along rights with
respect to its shares of Conepar. As a result, Nova Camaçari acquired all of
the capital stock of Intercapital and was obligated to purchase the capital
stock of Conepar owned by BNDESPAR. Following these acquisitions, Nova
Camaçari owned, directly and indirectly, 100% of Conepar's voting capital
stock.
In addition, members of the Odebrecht Group and the Mariani Group
exercised their tag-along rights with respect to their shares of Proppet, a
company that was wholly owned by members of the Odebrecht Group and the Mariani
Group. As a result, Nova Camaçari acquired all of the capital stock of
Proppet.
In connection with the Auction, members of the Odebrecht Group acquired
the capital stock of Norquisa held by Petronor for R$241.9 million and the
capital stock of Norquisa held by Trikem. As a result, the Odebrecht Group
owned 39.7% of the voting capital of Norquisa and, together with the Mariani
Group, held a combined 55.8% of the voting stock of Norquisa. On July 27,
2001, Odequi and PQBA entered into a shareholders' agreement with respect to
their direct and indirect equity interests in and control of Norquisa and the
Company. In addition, on July 3, 2001 and July 20, 2001, Odequi and PQBA
entered into memoranda of understanding with respect to the terms of
shareholders agreements with Petroquisa, Petros and Previ. See "Item 7. Major
Shareholders and Related Party Transactions – Shareholders Agreements."
On the same day as the Auction, Copene acquired Nova Camaçari (the "Nova
Camaçari Acquisition"). The main objective of the Nova
Camaçari Acquisition
was to restructure several Brazilian petrochemical companies to create a
company with integrated operations, allowing greater operational and fiscal
efficiency than was enjoyed by Copene alone. As part of the corporate
restructuring process in September 2001:
•
Nova Camaçari closed the acquisition of the non-voting capital
stock of Conepar owned by BNDESPAR;
•
Nova Camaçari merged with and into Copene;
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•
Intercapital merged with and into Copene; and
•
Proppet merged with and into Copene.
The structure of the Company immediately following these transactions is
set forth below. The percentages above or to the left of the connecting lines
represent the percentage of voting stock owned by the parent of each entity and
the percentages below or to the right of the connecting lines represent the
percentage of the total capital stock owned by the parent of each entity.
(1)
Copene did not control the operating and financial policies of Norcell
S.A. ("Norcell") because of certain covenants contained in a shareholders'
agreement dated April 20, 1989 between Copene and Riocell S.A.
("Riocell").
The Related Party Mergers
As part of the Company's strategy to create a company with integrated
operations, on August 16, 2002:
•
Copene merged with OPP Produtos Petroquímicos S.A. ("OPP
Produtos"), the holding company of the Odebrecht Group's chemical and
petrochemical assets (the "OPP Produtos Merger"), and exchanged a
portion of its shares in an aggregate amount of U.S.$20.0 million for
OPP Produtos's stock based on a net asset valuation of OPP Produtos
(excluding OPP Produtos's interest in OPP Química and Trikem); and
•
Copene merged with 52114 Participações S.A. ("52114
Participações"), the holding company of the Mariani Group's chemical
and petrochemical assets (the "52114 Merger" and, together with the OPP
Produtos Merger, the "Related Party Mergers"), and exchanged a portion
of its shares in an aggregate amount of U.S.$20.9 million for 52114
Participações's stock based on a net asset valuation of 52114
Participações.
Upon the completion of the Related Party Mergers, the corporate name of Copene
was changed to Braskem S.A.
The
principal assets of OPP Produtos were:
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•
100% of the voting stock, representing 81.2% of the capital stock,
of OPP Química, a company engaged in the production of polyethylene and
polypropylene.
•
29.5% of the capital stock and voting stock of Copesul, a company
that produces basic petrochemicals for the Southern Complex.
OPP Produtos owned 64.4% of the voting stock, representing
36.3% of the capital stock, of Trikem, the only vertically integrated
manufacturer of PVC in Brazil.
The Company issued shares representing 43.7% of its capital stock and
voting stock to ODB as consideration for the capital stock of OPP Produtos.
The principal asset of 52114 Participações was 92.3% of the capital stock
of Nitrocarbono, a public company engaged in the manufacture of caprolactam,
which is used in the production of textile thread (Nylon-6) and ammonium
sulfate, which is used as a fertilizer. The Company issued shares representing
3.6% of its capital stock and voting stock to Pronor as consideration for the
capital stock of 52114 Participações.
The structure of the Company as of December 31, 2002 is set forth below.
The percentages above or to the left of the connecting lines represent the
percentage of voting stock owned by the parent of each entity and the
percentages below or to the right of the connecting lines represent the
percentage of the total capital stock owned by the parent of each entity.
(footnotes on following page)
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(1)
Represents 73.1% of the voting and total capital stock of Tegal Terminal
de Gases, Ltda. ("Tegal") owned by Braskem, 6.4% of the voting and total
capital stock of Tegal owned by Trikem and 2.4% of the voting and total
capital stock of Tegal owned by OPP Química.
(2)
Represents 17.7% of the voting and total capital stock of Cetrel S.A. –
Empresa de Proteção Ambiental ("Cetrel") owned by Braskem, 14.5% of the
voting and total capital stock of Cetrel owned by Trikem, 2.7% of the
voting and total capital stock of Cetrel owned by Nitrocarbono, 0.7% of
the voting and total capital stock of Cetrel owned by OPP Química, and
0.4% of the voting and total capital stock of Cetrel owned by Polialden.
(3)
Braskem has no control over the operating and financial policies of
Norcell as a result of covenants contained in a shareholders agreement
dated April 20, 1989 between Copene and Riocell.
(4)
Represents 20.7% of the voting and total capital stock of Copesul owned
by Braskem, 3.0% of the voting and total capital stock of Copesul owned by
OPP Química, and 5.8% of the voting and total capital stock of Copesul
owned by OPE Investimentos S.A. ("OPE Investimentos"). OPP Química owns
89.4% of the capital stock, representing 92.1% of the voting stock, of OPE
Investimentos.
(5)
The name of Conepar was changed to Copene Participações S.A. ("Copene
Participações") in April 2002.
(6)
Represents 5.3% of the capital stock Trikem owned by Braskem, and 64.4%
of the voting capital stock, representing 36.3% of the total capital
stock, of Trikem owned by OPP Química. The capital stock of Trikem owned
by Braskem is non-voting.
Recent Developments
Since December 31, 2002, the Company has completed the following
transactions:
•
In February 2003, as required by
the Brazilian Corporate Law as a
result of the merger of 52114 Participações into the Company, the
Company conducted an exchange offer for the remainder of the voting
capital of Nitrocarbono. On February 13, 2003, the Company purchased
the tendered shares, and the Company at such time owned approximately
100% of the voting capital stock representing 93.8% of the total
capital stock of Nitrocarbono. The Company exchanged 1,612,169 of its
class A preferred stock for 2,257,935 common shares of Nitrocarbono.
•
On March 31, 2003, the Company merged with OPP Química, ESAE and
Nitrocarbono. Before these mergers, OPP Química and ESAE were wholly
owned subsidiaries of the Company. Before the Company's merger with
OPP Química, Odequi distributed the shares of OPP Química to Braskem.
In connection with its merger with Nitrocarbono, the Company issued
67,698 shares of its class A preferred stock to the former shareholders
of Nitrocarbono.
The Company's structure today is set forth below. The percentages above
or to the left of the connecting lines represent the percentage of voting stock
owned by the parent of each entity and the percentages below or to the right of
the connecting lines represent the percentage of the total capital stock owned
by the parent of each entity. All of these companies are organized under
Brazilian law.
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(1)
Represents 84.4% of the voting and total capital stock of Tegal owned by
the Braskem and 6.4% of the voting and total capital stock of Tegal owned
by Trikem.
(2)
Represents 21.1% of the voting and total capital stock of Cetrel owned by
Braskem, 14.5% of the voting and total capital stock of Cetrel owned by
Trikem, and 0.5% of the voting and total capital stock of Cetrel owned by
Polialden.
(3)
Braskem has no control over the operating and financial policies of
Norcell as a result of covenants contained in a shareholders agreement
dated April 20, 1989 between Copene and Riocell.
(4)
Represents 23.7% of the voting and total capital stock of Copesul owned
by Braskem and 5.8% of the voting and total capital stock of Copesul owned
by OPE Investimentos. Odequi owns 89.4% of the capital stock,
representing 92.1% of the voting stock, of OPE Investimentos.
Controlling Shareholder
The Odebrecht Group is a group of companies that was formed by the
Odebrecht family in the Northeastern state of Bahia beginning in 1945. As of
December 31, 2002, the Odebrecht Group was one of the 10 largest Brazilian
private-sector conglomerates in terms of revenue. The main sectors in which
the Odebrecht Group participates are:
•
heavy construction and engineering through Construtora Norberto Odebrecht S.A.;
•
chemicals and petrochemicals through the Company; and
•
infrastructure and public services through Odebrecht Serviços de Infraestrutura S.A.
Registered and Principal Executive Officers of the Company
The Company's registered office is at Rua Eteno 1561, Camaçari, Bahia
42810-000 and its telephone number at this address is 55-71-632-5200. The
Company's principal executive office is at Av. Nações Unidas, 4777, CEP
05477-000 São Paulo, SP, Brazil, and its telephone number at this address is
55-11-3443-9999.
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Material Subsidiaries and Equity Investees
As of December 31, 2002, the Company's significant subsidiaries were
Trikem, OPP Química, Polialden and Nitrocarbono. In addition, the Company's
equity investments in Copesul and Politeno have a significant impact on the
Company's Consolidated Financial Statements. Set forth below is a summary of
the Company's equity investments in, and the operations of, these companies.
Trikem
Trikem is a
sociedade anônima
(corporation) organized under the laws of
Brazil. At December 31, 2002, the Company owned directly and
indirectly 64.4%
of the voting capital stock, and 41.5% of the total capital stock, of Trikem.
The Company's Vinyls Unit is comprised of the operations of Trikem.
Trikem is the only vertically integrated producer of PVC in Brazil. Its
production is integrated through the production of chlorine and other raw
materials. Trikem also manufactures and sells caustic soda, EDC and chlorine.
Trikem's activities are conducted at five industrial plants, two located in the
Northeastern Complex, one in São Paulo, and one in Maceió and Marechal Deodoro,
Alagoas. For details of these operations, see "—Overview of Braskem's
Operations—The Vinyls Unit."
The Company, through OPP Química, which merged with and into the Company
on March 31, 2003, ODB and BNDESPAR have entered into a shareholders' agreement
in respect of their shares of Trikem. Under the shareholders' agreement, the
Company and ODB have agreed to vote their shares to elect one member of
Trikem's board of directors designated by BNDESPAR. To ensure that BNDESPAR
always designates at least one member of Trikem's board of directors, the
Company and ODB agreed to maintain voting control over Trikem (through
agreement or otherwise). If, however, the Company and ODB collectively are
unable to elect a majority of the board of directors plus one member designated
by BNDESPAR, the Company and ODB agree to take all steps in order to appoint a
non-voting member of Trikem's board of directors to represent BNDESPAR. Under
the shareholders' agreement, the Company and ODB also granted tag-along rights
to BNDESPAR in the event that they sell their voting control of Trikem to a
third party. BNDESPAR also may require the Company and ODB to purchase its
Trikem shares if they do not comply with the terms of the shareholders'
agreement and do not cure any such non-compliance within a specified period.
The shareholders' agreement expires on August 24, 2011, or on any earlier date
that BNDESPAR ceases to hold more than 10.0% of the Trikem's capital stock, or
more than 5.0% of the capital stock of any successor company.
OPP Química
OPP Química was a
sociedade anônima
(corporation) organized under the laws
of Brazil. At December 31, 2002, the Company indirectly owned 100% of the
capital stock of OPP Química. OPP Química was merged into the Company on March
31, 2003.
Prior to its merger into the Company, the activities of OPP Química
included fabricating, processing, enhancing, manufacturing, mixing, importing,
exporting, purchasing, distributing and selling plastic resins, as well as raw
materials, derivates and related products, and providing technical and
administrative consulting services relating to these activities. OPP Química
also acted as a holding company for its subsidiaries and its equity investments
in associated companies.
Prior to its merger into the Company on March 31, 2003, OPP Química
operated four plants, three located at the Southern Complex and one located in
the Northeastern Complex. For details of these operations, see "—Overview of
the Company's Operations—The Polyolefins Unit."
Polialden
Polialden is a
sociedade anônima
(corporation) organized under the laws of
Brazil. At December 31, 2002, the Company indirectly owned 66.6% of the voting
capital stock and 42.6% of the total capital stock, of Polialden.
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Polialden is engaged in manufacturing, processing, selling, importing and
exporting high density polyethylene (ultra high molecular weight polyethylene)
and other chemical and petrochemical products. Polialden operates an
industrial unit in the Northeastern Complex. For details of these
operations, see "—Overview of the Company's Operations—The Polyolefins Unit."
The Company's subsidiary, Conepar has entered into a shareholders'
agreement with Mitsubishi Chemical Industries Limited ("Mitsubishi")
(representing itself and Nissho Iwai Corporation ("Nissho Iwai")) with respect
to its shares of Polialden. Mitsubishi owns 16.6% of the voting stock,
representing 6.8% of the capital stock, of Polialden. Under this shareholders'
agreement, each of Conepar and Mitsubishi has agreed with Mitsubishi not to
cause Polialden to take certain actions unless the other party agrees,
including amending Polialden's bylaws, dissolving or liquidating Polialden,
merging Polialden with another company, redeeming shares of its stock or debt
obligations, selling its fixed assets, encumbering its property and engaging in
transactions with certain related parties, in some cases subject to exceptions.
The shareholders' agreement provides that Conepar will agree with Mitsubishi
with respect to the nomination of Polialden's board of directors, executive
officers and fiscal council. However, as Conepar owns the majority of the
voting stock, if it is unable to agree with Mitsubishi, Conepar has the right
to appoint the directors and executive officers.
Nitrocarbono
Nitrocarbono was a
sociedade anônima
(corporation) organized under the
laws of Brazil. At December 31, 2002, the Company owned 92.2% of the capital
stock, representing 95.4% of the voting capital stock, of Nitrocarbono.
Nitrocarbono was merged into the Company on March 31, 2003.
Prior to its merger into the Company, Nitrocarbono was engaged in the
manufacture, processing, trade, import, export and other activities related to
the production and sale of caprolactam, which is used in the production of
textile thread (Nylon-6) and ammonium sulfate, which is used as a fertilizer,
as well as by-products of caprolactam. Nitrocarbono also acted as a holding
company for its equity investments in associated companies.
Nitrocarbono operated one industrial unit in the Northeastern Complex.
For details of these operations, see "—Overview of the Company's Operations—The
Business Development Unit."
Copesul
Copesul is a
sociedade anônima
(corporation) organized under the laws of
Brazil. At December 31, 2002, the Company owned, directly and indirectly,
29.5% of the voting and total capital stock of Copesul.
Copesul is engaged in the manufacture, trade, import and export of basic
petrochemical products and the production and supply of utilities, such as
steam, water, compressed air and electrical energy, and the supply of those
utilities to the companies in the Southern Complex, and the provision of
services to companies in the Southern Complex. The Company currently purchases
ethylene and propylene, the principal raw materials used by the Company's
plants in the Southern Complex, from Copesul.
The Company has entered into a shareholders' agreement with Ipiranga
Petroquímica S.A. ("Ipiranga") with respect to the Company's shares of Copesul.
Ipiranga owns 29.4% of the voting and total capital stock of Copesul. Through
this shareholders' agreement, the Company and Ipiranga jointly control Copesul.
The Company has a right of first refusal in respect of sales by Ipiranga of
any of its shares in Copesul. The Company has agreed to consult with Ipiranga
prior to any meeting of the board of directors or shareholders of Copesul and
to vote its shares together with Ipiranga with respect to certain matters,
including policies relating to the allocation of the excess amounts of raw
materials, policies relating to the distribution of profits, the election of
members of the board of directors, changes to Copesul's bylaws, approval of
indebtedness in excess of certain limits, sales of assets in excess of certain
limits, investments in excess of certain limits and any merger of Copesul with
another company. The Company has also agreed that neither it nor Ipiranga will
vote to approve any of the above matters unless the Company and Ipiranga vote
at least three-quarters of the shares held by them and such action at a meeting
of the parties to the shareholders' agreement, or if no quorum is obtained at
such meeting, of three-quarters of the shares present at a second meeting.
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The shareholders' agreement provides that the Company will vote with
Ipiranga in a manner designed to ensure that both the Company and Ipiranga are
able to elect the maximum possible directors of Copesul. This shareholders'
agreement is effective until August 2022. The parties to this shareholders'
agreement have agreed not to enter into shareholders' agreements with any other
shareholders of Copesul.
Politeno
Politeno is a
sociedade anônima
(corporation) organized under the laws of
Brazil. At December 31, 2002, the Company owned 35.0% of the voting capital
stock, representing 34.7% of the total capital stock of Politeno.
Politeno is engaged in the manufacture, processing, direct or indirect
trade, consignment, export, import and transportation of polyethylene,
principally LDPE, LLDPE and HDPE, and certain byproducts, principally ethylene
vinyl acetate. Politeno also acts as a holding company for its subsidiaries
and its equity investments in associated companies. Politeno currently
purchases ethylene, its principal raw material, from the Company.
The Company (through Conepar) has entered into a shareholders' agreement
with Suzano, Sumitomo Chemical and Itochu with respect to its shares of
Politeno. Suzano owns 35.0% of the voting stock, representing 34.7% of the
total capital stock of Politeno, Sumitomo Chemical owns 20.0% of the voting
stock, representing 16.8% of the total capital stock of Politeno, and Itochu
owns 10.0% of the voting stock, representing 8.4% of the total capital stock of
Politeno. The Company has the right to elect two of the seven members of the
board of directors of Politeno and, together with Suzano, the right to elect a
third member of the board of directors, which right is exercised alternatively
by the Company and Suzano (
e.g
., Suzano elects a member of the board of
directors for one term and then the company elects a member of the board of
directors for the succeeding term). The Company also has the right to elect
one of Politeno's six executive officers.
The Company has agreed in the Politeno shareholders' agreement that it
will attempt to reach unanimous decisions with respect to certain actions to be
taken by the board of directors or shareholders of Politeno, including changes
to Politeno's bylaws, subject to certain exceptions, dissolution or liquidation
of Politeno, the merger of Politeno with another company, transactions with
affiliates of Politeno in excess of specified amounts or in excess of specified
durations, encumbering of assets of Politeno in excess of specified amounts and
entering into contracts or indebtedness in excess of certain specified amounts.
The Company also has interests in other companies in respect of which it
has entered into shareholders' agreements, including Petroflex Indústria e
Comércio S.A. ("Petroflex"), Norcell, Borealis-OPP S.A. ("Borealis-OPP") and
Copene Monômeros S.A. ("Copene Monômeros").
Principal Capital Expenditures
The Company's capital expenditures were U.S.$115.5 million in 2002,
U.S.$146.3 million in 2001 and U.S.$58.4 million in 2000. The Company's
principal capital expenditure projects during 2000 through 2002 were:
•
the expansion of the Company's ethylene production capacity at the Northeastern Complex;
•
the upgrade in the facilities of the Aratu port terminal and the related pipeline system; and
•
other operating improvements made in the Company's Vinyls,
Polyolefins and Business Development Units.
The Company is currently completing the expansion of the ethylene
production capacity of its pyrolysis plant that is part of the Olefins Unit 1.
Upon completion of this expansion by the end of 2003, this
plant's ethylene production capacity will reach 1,280,000 tons of annual nominal capacity. The
total cost of this expansion is estimated at U.S.$67.5 million, of which
U.S.$61.0 million was incurred in 2002.
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In response to the termination of Petrobras's monopoly over naphtha supply
in Brazil, in 2001, the Company invested in the adaptation of the existing
maritime pier located at Aratu and the construction of pipelines, storage tanks
and other facilities necessary to receive and transport imported naphtha to its
basic petrochemicals plants. The total cost of this project was approximately
U.S.$37 million.
Each of the Company's business units undertakes a regular program of
maintenance shutdowns. The pyrolysis plant that is part of the Olefins Unit 1
was shutdown for 92 days in 2002, which shutdown took place for the performance
of regular maintenance and expansion of the plant's ethylene production
capacity, which expansion project is expected to be completed by the end of
2003. The pyrolysis plant that is part of Olefins Unit 2 is scheduled to be
shutdown for maintenance in November 2003. The Company coordinates the
maintenance cycles of its polyolefins plants in the Northeastern Complex with
those of its basic petrochemicals plants and of its polyolefins plants in the
Southern Complex with those of Copesul. The Company's PVC, caustic soda, PET
and caprolactam plants are shut down for maintenance every two years.
On December 19, 2000, OPP Petroquímica S.A. ("OPP Petroquímica," a
predecessor of OPP Química) sold 80% of its ownership and
voting interest in OPP Polímeros Avançados S.A. ("OPP Polímeros") to Borealis
A/S, a European group, for cash. OPP Polímeros then changed its name to
Borealis-OPP. The Company, through OPP Petroquímica, has agreed to continue to
supply polypropylene resins to Borealis-OPP for a period of at least 10 years
on market terms. Borealis-OPP produces specialized compounds in two production
facilities for use in manufacturing applications in the automotive, appliance
and injection-molded furniture industries.
Petrochemical Industry Overview
The petrochemical industry transforms crude oil by-products or natural gas
into widely used consumer and industrial goods. The Brazilian petrochemical
industry is generally organized into first, second and third generation
producers based on the stage of transformation of various raw materials, or
feedstocks.
First Generation Producers
Brazil's first generation producers, which are referred to as "crackers,"
break down or "crack" naphtha, their principal feedstock, into basic
petrochemicals. The crackers purchase their naphtha, which is a by-product of
the oil refining process, primarily from Petrobras, as well as other refineries
located outside of Brazil. The basic petrochemicals produced by the crackers
include (1) olefins, primarily ethylene, propylene and butadiene and (2)
aromatics, such as benzene, toluene and xylenes. The Company, Copesul, and
Petroquímica União ("PQU"), operate Brazil's three crackers and sell these
basic petrochemicals to second generation producers. The basic petrochemicals,
which are in the form of either gases or liquids, are transported to the second
generation producers' plants, generally located near the crackers, through
pipelines for further processing.
Second Generation Producers
Second generation producers process the basic petrochemicals purchased
from the crackers to produce thermoplastic resins and intermediate
petrochemicals. These products include (1) polyethylene, polystyrene and PVC
(each produced from ethylene), (2) polypropylene and acrylonitrile (each
produced from propylene), (3) caprolactam (produced from benzene) and (4)
polybutadiene (produced from butadiene). There are approximately 48 second
generation producers operating in Brazil. The intermediate petrochemicals are
produced in solid form as plastic pellets or powders and are transported by
truck to third generation producers, which generally are not located near the
second generation producers. The Company is the only integrated first and
second generation petrochemical company in Brazil.
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Third Generation Producers
Third generation producers, known as transformers, purchase the
intermediate petrochemicals from second generation producers and transform them
into final products. These final products include plastics (produced from
polyethylene, polypropylene and PVC), acrylic fibers (produced from
acrylonitrile), nylon (produced from caprolactam), elastomers (produced from
butadiene) and disposable containers (produced from polystyrene). Third
generation producers produce a variety of consumer and industrial goods,
including containers and packaging materials, such as bags, film and bottles,
textiles, detergents, paints, automobile parts, toys and consumer electronic
goods. There are over 6,000 third generation producers operating in Brazil.
Petrochemical Complexes
The production of first and second generation petrochemicals in Brazil
centers around three major complexes. These are the Northeastern Complex
located in Camaçari in the State of Bahia, the São Paulo complex located in
Capuava in the State of São Paulo (the "São Paulo Complex"), and the Southern
Complex. Each complex has a single first generation producer, also known as
the "raw materials center" operated by the Company, PQU and Copesul,
respectively, and several second generation producers that purchase feedstock
from the raw materials center.
The Northeastern Complex began operations in 1978. The Northeastern
Complex consists of 28 second generation producers situated around the Company,
as the raw materials center for this Complex. As of December 31, 2002, the
Company had an annual ethylene production capacity of 1,200,000 tons and in
2002 accounted for approximately 42% of Brazil's installed ethylene production
capacity.
The São Paulo Complex began operations in 1968 and is the oldest
petrochemical complex in Brazil. PQU, the operator of its raw materials
center, supplies first generation petrochemicals to 11 second generation
producers, including the Company. As of December 31, 2002, PQU had an annual
ethylene production capacity of 500,000 tons.
The Southern Complex began operations in 1982. Copesul, the operator of
this Complex's raw materials center, supplies first generation petrochemicals
to six second generation producers, including the Company. As of December 31,
2002, Copesul had an annual ethylene production capacity of 1,135,000 tons.
A fourth petrochemical complex is being constructed in the State of Rio de
Janeiro. Rio Polímeros, a Brazilian petrochemical company, will serve as the
cracker for the new complex and is constructing a petrochemical plant in Duque
de Caxias, Rio de Janeiro, with an annual capacity to produce 520,000 tons of
ethylene, 75,000 tons of propylene and 540,000 tons of linear low density
polyethylene and high density polyethylene. This plant will use natural gas as
a feedstock and has announced that it expects to commence operations in June
2004.
Role of the Brazilian Government
The current structure of the petrochemical industry reflects the Brazilian
government's plan, developed during the 1970s, to establish a domestic
petrochemical industry to serve Brazilian markets. First and second generation
producers, such as Braskem, are located within close proximity of each other to
allow the common use of facilities, such as utilities, and to facilitate
feedstock delivery. Prior to their respective privatization, production
capacity expansions at the crackers and the second generation producers were
coordinated to ensure that the supply of petrochemicals met demand. During
this period, the infrastructure that developed around or near the complexes
further fostered the interdependence of first and second generation producers,
as limited facilities were constructed to facilitate the transportation and
storage of feedstocks for import or export.
The Brazilian government developed the Brazilian petrochemical industry by
promoting the formation of tripartite joint ventures among the Brazilian
government, foreign petrochemical companies and private Brazilian investors.
Petrobras's majority-owned subsidiary, Petroquisa, participated in each joint
venture as the representative of the Brazilian Government; a foreign petrochemical company provided technology
and a Brazilian private sector company provided management.
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In 1992, the Brazilian government began a privatization program to reduce
significantly its interests in, and influence over, the petrochemical industry,
particularly with respect to first and second generation producers. This
program was designed to increase private investment in the petrochemical
industry and to spur its consolidation and rationalization. As a result of
privatization auctions, the Brazilian Government's ownership of the voting
stock of Braskem, Copesul and PQU was significantly reduced, and the private
ownership of the second generation producers, through the private groups that participate in the voting stock
of the crackers, increased. These privatizations also fostered the development
of the Company and the vertical integration of its operations.
The following table sets forth the percentage of the indirect interests
held in the crackers' voting stock before the privatization of each of them and
as at December 31, 2002.
Before privatization
As at December 31, 2002
Date of
Private
Private
privatization
Government
Groups
Others(1)
Government
Groups
Others (1)
Copesul
May 15, 1992
67.2
2.1
30.7
15.6
52.9
31.5
PQU
Jan. 24, 1994
67.8
31.9
0.3
17.5
62.3
20.2
Braskem (2)
Aug. 15, 1995
48.2
50.4
1.4
8.1
79.0
12.9
(1)
Pension funds, banks and employees.
(2)
The decrease in government ownership of the Company's capital stock also
reflects the merger of Copene (which was partially state-owned) with OPP,
Nitrocarbono and Proppet (which were majority-owned by private groups).
Role of Petrobras
Until recently, Brazil's Constitution granted the Brazilian government a
monopoly, exercised through Petrobras, over the research, exploration,
production, refining, importing, and transporting of crude oil and refined
petroleum products (excluding petrochemical products) in Brazil. The Brazilian
Constitution also provided that by-products of the refining process, such as
naphtha, could only be supplied in Brazil by or through Petrobras. Naphtha is
the feedstock used in Brazil for the production of basic petrochemicals such as
ethylene and propylene. Since 1995, the Brazilian government has taken several
measures to deregulate the petrochemical industry in Brazil. With the creation
of the
Agência Nacional de Petróleo
(the National Petroleum Agency, or ANP), in
1997, new rules and regulations have been implemented, aimed at gradually
liberalizing Petrobras's monopoly. Since 2000, several first generation
producers, including Braskem, have imported naphtha from trading companies and
oil and gas producers abroad.
Petrobras produced and sold approximately 80% of the naphtha consumed in
Brazil in 2002. Braskem and Copesul collectively imported the remaining 20% of
naphtha consumed in Brazil in 2002.
Tariffs
The Company sets prices for ethylene, its principal first generation
petrochemical product, using a margin sharing system. Prices paid for imported
first generation products are based on international market prices, taking into
account transportation and tariff costs. The prices charged by first
generation producers are based on similar factors. Tariff rates imposed by the
Brazilian Government on petrochemical imports have varied over time. See
"—Overview of the Company's Operations—The Basic Petrochemicals Unit—Sales and
Marketing of Basic Petrochemical Products." The price of ethylene by-products,
such as butadiene, is set by reference to several market factors, including the
prices paid by second generation producers for imported products.
Second generation producers, including the Company, generally set prices
for their products by reference to several market factors, including the prices
paid by third generation producers for imported products. Prices paid for such
imports are based in part on transportation and tariff costs. Consequently,
the prices charged by the second generation producers are affected by tariff
rates imposed by the Brazilian government on petrochemical imports.
In the past, the Brazilian government has frequently used import and export tariffs to
effect economic policies, with the consequence that tariffs generally, and
those imposed on petrochemical products in particular, have varied
significantly. In November 1997, for example, the import tariffs for
polyethylene, polypropylene and PVC were increased from 14% to 17%, but were
subsequently reduced to 15.5% on January 1, 2002. On January 1, 2002, the
import tariff for caustic soda was reduced from 10.5% to 9.5%. As of December
31, 2002, the import tariffs for basic petrochemical products ranged between
3.5% and 5.5% (except for caustic soda) and the import tariffs for second
generation petrochemical products ranged between 3.5% and 15.5%. Imports and
exports within the Mercosul countries have not been subject to tariffs since
December 2001.
22
Table of Contents
The following table shows the fluctuation of the tariffs on basic
petrochemicals and second generation petrochemicals after 1993. The tariff
rates shown are those applicable at the end of the respective years.
2002
(1)
2001
(2)
2000
1999
1998
1997
(3)
1996
1995
1994
1993
(%)
Basic petrochemicals
Ethylene
3.5
4.5
5
5
5
5
2
2
0
0
Propylene
3.5
4.5
5
5
5
5
2
2
0
0
Butadiene
3.5
4.5
5
5
5
5
2
2
0
0
Toluene
5.5
6.5
7
7
7
7
4
4
0
0
Benzene
5.5
6.5
7
7
7
7
4
4
0
0
Ortho-xylene
5.5
6.5
7
7
7
7
4
4
0
0
Para-xylene
5.5
6.5
7
7
7
7
4
4
0
0
Caustic soda
9.5
10.5
11
11
11
11
8
1
0
(5)
5
Second generation
petrochemicals
TDI
15.5
16.5
17
17
17
17
14
14
14
(6)
15
EDC
11.5
12.5
13
13
13
13
10
10
10
(7)
15
LAB
13.5
14.5
15
15
15
15
12
12
14
(8)
15
(12)
Ethylene oxide
3.5
4.5
5
5
5
5
2
2
0
0
Propylene oxide
3.5
4.5
5
5
5
5
2
2
0
0
HDPE
15.5
16.5
17
17
17
17
14
2
2
(9)
15
LDPE
15.5
16.5
17
17
17
17
14
2
2
(9)
15
LLDPE
15.5
16.5
17
17
17
17
14
2
2
(9)
15
Polypropylene
15.5
16.5
17
17
17
17
14
2
2
(9)
15
Polystyrene
15.5
16.5
17
17
17
17
14
2
2
(9)
15
PVC
15.5
16.5
17
17
17
17
14
2
2
(9)
15
Styrene
11.5
12.5
13
13
13
13
10
10
2
(10)
10
Acrylonitrile
13.5
14.5
15
15
15
15
12
8
(4)
2
(11)
15
DMT
13.5
14.5
15
15
15
15
12
8
(4)
2
(11)
15
Caprolactam
13.5
14.5
15
15
15
15
12
8
(4)
2
(11)
15
(1)
In 2002, the official tariff was 1.5% less than the rate stated above.
An additional surcharge of 1.5% was assessed, which is included in the
rate shown.
(2)
In 2001, the official tariff was 2.5% less than the rate stated above.
An additional surcharge of 2.5% was assessed, which included in the rate
shown.
(3)
An additional tariff of 3% was assessed commencing on November 13, 1997,
which included in the rate shown.
(4)
4% until April 27, 1995; 8% after that date.
(5)
5% applied until March 1, 1994; 8% applied from March 1, 1994 through
October 1, 1994; 0% from October 4, 1994.
(6)
15% applied until September 22, 1994; 14% after that date.
(7)
15% applied until September 22, 1994; 10% after that date.
(8)
15% applied until September 25, 1994; 14% after that date.
(9)
15% applied until September 25, 1994; 14% after that date; 2% from
November 24, 1994.
(10)
10% applied until November 11, 1994; 2% after that date.
(11)
15% applied until September 22, 1994; 14% after that date; 2% from
November 24, 1994.
(12)
20% applied until July 1, 1993; 15% after that date.
Source:
ABIQUIM —
Associação Brasileira da Indústria Química
(the Brazilian
Chemical Industry Association, or ABIQUIM).
23
Table of Contents
Operating Environment
The Brazilian markets in which the Company competes are cyclical that are
sensitive to relative changes in supply and demand, which in turn, are affected
by general economic conditions in Brazil and other countries in the Mercosul
free trade area, particularly Argentina. The Brazilian markets are also
affected by the cyclical nature of international markets because prices in
Brazil are determined in part by reference to world petrochemical prices and
prices paid by importers of petrochemicals products. Reductions in
tariffs and other trade barriers have increasingly exposed the Brazilian
petrochemical industry to the cyclicality of the international markets.
Traditionally, the second and third quarters have been the periods of the
year with the highest sales for the petrochemical industry in the Brazilian
market. The increase during this six-month period is tied in part to
production of consumer goods to be sold during the end of the year holiday
season.
With the growth of Brazilian GDP of approximately 1.5% in 2002 compared to
1.4% in 2001, the domestic demand in the three principal petrochemical markets
– thermoplastics, elastomers and synthetic fibers – increased by approximately
2.6% compared to 2001. During 2002, imports of thermoplastics registered
moderate growth of 1.7%. Although imports represent a small percentage of
overall Brazilian petrochemical consumption, polyolefins and PVC imports grew
by 11.0% and 9.8%, respectively, during 2002, while imports of PET and
polystyrene decreased by 18.9% and 35.2%, respectively. The increase in
polyolefins and PVC imports was in part linked to the economic crisis in
Argentina, where producers of these products attempted to sell their excess
capacity to Brazil in light of depressed demand for polyolefins and PVC in
Argentina. PET and polystyrene imports decreased in line with cyclical
patterns in those markets.
The Company anticipates that demand for its products in Brazil will
continue to grow due to increasing consumption of plastic-based products,
population growth, improvements in per capita income and general economic
growth in Brazil. In addition, despite the high growth rates for domestic
consumption, Brazilian per capita consumption of second generation
petrochemicals has been modest compared to per capita consumption in other
countries, which the Company believes suggests a potential for future growth in
Brazil.
The following table sets forth information relating to the Company's
production, the estimated production of other Brazilian companies and exports
of olefins and aromatics for the years indicated.
Production
Estimated
of Other
Total
Total
Company
Brazilian
Domestic
Production
Production
Companies
Imports
Exports
Consumption
(in thousands of tons)
Olefins (1)
2002
3,847.8
1,591.8
2,256.0
N.A.
(5)
N.A
N.A.
2001
4,077.8
1,705.4
2,372.4
29.1
108.6
3,998.2
2000
4,309.2
1,790.3
2,519.0
2.4
93.0
4,218.6
Aromatics(2)
2002
1,541.2
666.6
874.6
N.A
N.A.
N.A.
2001
1,282.9
698.1
584.8
110.5
283.3
1,110.1
2000
1,349.3
712.6
636.7
78.7
372.1
1,055.9
Polyolefins(3)
2002
2,623.0
1,064.7
1,558.3
335.6
492.0
2,466.6
2001
2,557.1
1,031.0
1,526.1
302.3
487.8
2,371.6
2000
2,719.3
1,160.7
1,558.6
256.9
605.3
2,370.9
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Table of Contents
Production
Estimated
of Other
Total
Total
Company
Brazilian
Domestic
Production
Production
Companies
Imports
Exports
Consumption
(in thousands of tons)
Vinyls(4)
2002
602.4
401.8
200.6
141.8
55.5
688.8
2001
538.1
363.4
174.7
129.2
46.7
620.5
2000
648.2
448.8
199.4
117.8
34.9
731.1
PET
2002
332.0
59.0
273.0
147.2
55.8
423.5
2001
329.0
56.5
272.5
181.6
28.3
482.4
2000
333.7
55.2
278.4
133.0
47.8
418.9
Caprolactam
2002
57.5
57.5
—
4.4
9.4
52.5
2001
48.2
48.2
—
3.3
4.2
47.3
2000
56.0
56.0
—
4.2
5.8
54.3
(1)
Includes ethylene, propylene and butadiene.
(2)
Includes benzene, toluene, xylenes and C9 solvent.
(3)
Includes polyethylene, high density polyethylene, low density
polyethylene, linear low density polyethylene and polypropylene.
(4)
Suspension and emulsion PVC.
(5)
N.A. means not available.
Source: Olefins and Aromatics:
Associación de Petroquímicos de Latino América
(Latin American Petrochemical Association) and Braskem; Polyolefins,
Vinyls, PET and Caprolactam: ABIQUIM and Braskem.
The above estimates of total domestic consumption assume that all domestic
production is immediately sold in the market and that there has been no change
in total domestic inventory. Basic petrochemical producers are designed to
operate with low inventories of products and low inventory storage capacities
(the Company's average storage time is approximately 20 days for finished goods
and six days for naphtha).
Overview of the Company's Operations
The Company is the largest petrochemical company in Latin America and one
of the five largest Brazilian industrial companies, based on net revenues. The
Company has a diversified portfolio of chemical products, large competitive
scale and a strategic focus on thermoplastics. The Company is the only
Brazilian company with integrated first and second generation petrochemical
production facilities. The Company also sells electricity and other utilities
and services to unaffiliated customers.
The Company is the result of a corporate restructuring process that
integrated the operations of six Brazilian petrochemical companies: Copene; OPP
Química; Polialden; Trikem; Proppet; and Nitrocarbono. The Company's business
operations are organized into four business units, corresponding to its
principal products, production processes and markets:
•
Basic Petrochemicals (reflecting the operations of Copene, the Company's predecessor);
•
Polyolefins (reflecting the
operations of OPP Química and Polialden);
•
Vinyls (reflecting the operations of Trikem); and
•
Business Development (reflecting the operations of Nitrocarbono and
Proppet and management of certain of the Company's other minority
investments).
25
Table of Contents
The integration of the operations of the six Brazilian petrochemical
companies that formed the Company has resulted in and, the Company believes
will continue to yield substantial savings and synergies, including, without
limitation, in respect of taxes, procurement and logistics expenses, selling,
general and administrative expenses and other operating expenses.
Business Strategy
The Company's strategy is to continue to (1) increase and strengthen the
leading market positions of its second generation businesses in Brazil and
Latin America and (2) improve its cost competitiveness through vertical
integration (
e.g.
, by producing ethylene and propylene, the principal raw
materials for its second generation polyolefins products). The key elements of
this strategy are as follows:
Increase Focus on Customer Relationships
The Company is focusing on further improving customer service and
developing closer, longer-term relationships with its customers. Recognizing
the cyclical nature of the markets for its petrochemical products, the Company
believes that by focusing on customer relationships it can strengthen customer
loyalty during periods of lower demand for its products. The Company's sales
growth strategy is based on:
•
increasing the consumption of its current clients, including
through the development of new applications focused on replacing
non-plastic materials and other thermoplastics with plastics. To assist
the Company in this effort, Braskem maintains technology, innovation
and application facilities that seek to (1) optimize the ease with
which its clients process its products, (2) identify new product market
opportunities, (3) increase existing capacity, (4) reduce operating
costs and (5) upgrade and optimize product technology in order to
develop new products in response to its customers' requirements. The
Company also maintains pilot plants to accelerate the time-to-market of
its new products;
•
increasing the volume of exports; and
•
entering into additional long-term supply contracts with existing and new clients.
Pursue Selected Growth Opportunities
The Company is constantly in search of growth opportunities in the markets
in which it competes or in related markets. For instance, the development of
UTEC™, the Company's ultra-light molecular weight polyethylene, has given the
Company a new product line with market potential and profitability. Developed
from one of the Company's high density polyethylene units in Bahia, UTEC™ is a
polymer for technical applications due to its superior mechanical properties.
UTEC™ has been mainly sold in the United States. The Company's production and
sale of automotive gasoline is another example of a selected growth opportunity
that the Company has pursued. The automotive gasoline produced by its Basic
Petrochemicals Unit is of extremely high quality, which has allowed the Company
to compete to a limited extent in the Northeast of Brazil and to export its
gasoline to the United States.
Expand the Company's Production Capacity
The Company plans to expand progressively the production capacity of its
business units over the next three to five years based on expected demand
growth for its products. Expansion will be primarily achieved through
efficiency enhancements at its plants and through modernizing production
technology. The Company believes that this additional production capacity will
help it to maintain its leadership position in the Brazilian markets in which
it competes, as well as support its expansion into strategic export markets.
Continue to Reduce Operating Costs and Increase Operating Efficiencies
In part as a result of its vertical integration, the Company is a low-cost
producer of first and second generation petrochemicals. The Company has an
ongoing program to increase operating efficiencies and to reduce
operating costs, while capturing all potential synergies from the mergers that resulted
in the formation of the Company. Since its consolidation in August 2002
through the mergers described in "History and Development of the Company," the
Company has decreased the overall number of its employees by approximately 13%,
while at the same time increasing its production. In order to capture
potential synergies from the mergers, the Company has assigned a
team to monitor the development of all of its post-merger initiatives and
to report frequently to its management to assure that adequate resources are
promptly made available and efficiently used.
26
Table of Contents
The Company believes that securing its feedstock at competitive prices is
an important part of its cost control and reduction program. Although its
basic petrochemicals plants are capable of using naphtha, natural gas
condensates or, to a limited extent, natural gas, as feedstocks, the Company
uses naphtha almost exclusively. Naphtha is the most significant direct cost
associated with the Company's production of basic petrochemicals. Naphtha,
including naphtha purchased by the Company's Basic Petrochemicals Unit and
naphtha used to produce the ethylene purchased by the Company's Polyolefins
Unit from Copesul, accounted for approximately 66% of its total cost of sales
in 2002. Since the deregulation of the monopoly of Petrobras over the supply
of naphtha and other petroleum refined products, the Company began to import
naphtha, and during the year ended December 31, 2002, the Company purchased
approximately 30% of its feedstock requirements through imported naphtha and
natural gas condensate, primarily from suppliers located in Africa.
The Basic Petrochemicals Unit
The Company's Basic Petrochemicals Unit is comprised of the historical
operations of Copene, the Company's predecessor. Prior to the Nova Camaçari
Acquisition on July 25, 2001, the operations of the Basic Petrochemicals Unit
comprised all of the Company's operations. Financial information with respect
to the Basic Petrochemicals Unit that is contained in this section is based on
the historical results of the Company prepared in accordance with Brazilian
Corporate Law. See "—History and Development of the Company" and "Item 5.
Operating and Financial Review and Prospects—The Auction, the Nova Camaçari
Acquisition and the Related Party Mergers."
The Company's basic petrochemicals operations are conducted in five major
units (Olefins 1, Olefins 2, Aromatics 1, Aromatics 2 and Energy and Services)
and various plants located at the Northeastern Complex. The Northeastern
Complex is located:
•
36 kilometers from the Madre de Deus Port Terminal, a port terminal
which is owned and operated by Petrobras;
•
27 kilometers from
Refinaria Landulfo Alves Mataripe
("RLAM"), one
of the largest refineries in Brazil, which is owned and operated by
Petrobras; and
•
22 kilometers from the port terminal of Aratu, which is operated by
Terminal Químico de Aratu S.A. – TEQUIMAR, a subsidiary of Ultrapar
Participações S.A.
The Company uses the Madre de Deus Port Terminal to unload naphtha
imported by Petrobras or that comes from other Petrobras refineries located
outside the State of Bahia. A pipeline owned by Petrobras transports naphtha
from the Madre de Deus Terminal toward RLAM where it interconnects with RLAM's
naphtha pipeline system. RLAM's naphtha pipeline system interconnects with the
pipeline system of the port of Aratu, through which naphtha and natural gas
condensate, a stream from natural gas fields that is similar to a
naphtha-diesel blend, are transported to the Company's basic petrochemicals
plants.
A 477 kilometer ethylene pipeline connects the Company's basic
petrochemicals units and plants to its chlorochemical complex in the State of
Alagoas at which Braskem's Vinyls Unit uses ethylene as a raw material in
producing PVC and other products. See "—Overview of the Company's
Operations—Vinyls Unit." In addition, the Northeastern Complex is serviced by
a well-developed road and rail network, facilitating the transportation of
petrochemicals to other regions of Brazil.
27
Table of Contents
The Company's basic petrochemicals plants produce two principal types of
petrochemicals: olefins and aromatics. During the year ended December 31,
2002, approximately 30.2% of Braskem's olefin production and 12.6% of the
Company's aromatics production were consumed by the Company or sold to related
parties, some of which have since merged with and into Braskem, for use in the
production of second generation petrochemical products. See "Item 7. Major
Shareholders and Related Party Transactions—Related Party Transactions."
The Company's Basic Petrochemicals Unit also:
•
produces automotive gasoline, LPG and Solvent C9;
•
supplies steam, water, compressed air and electric power to other
plants in the Northeastern Complex; and
•
renders services to the operators of other plants in the
Northeastern Complex.
Products of the Basic Petrochemicals Unit
The following chart shows the major products produced by the Basic
Petrochemicals Unit, their derivative intermediate products and their most
common end uses.
Braskem's products
Intermediate products
Most common end uses
Olefins
Ethylene
Low density/linear low density
polyethylene (2)
Garbage bags, packaging film, toys,
housewares, electrical insulation,
paper coatings
High-density polyethylene (2)
Blow-molded plastic bottles (such
as milk bottles)
Ethylene oxide, used to produce
ethylene glycol
Polyester fibers and PET resin
Ethylene dichloride, used to produce
polyvinyl chloride (1)
Pipes, home siding, upholstery,
floor coverings
Ethylbenzene, used to produce SM
and then PS
Disposable cups and containers,
high-impact plastics
Propylene (polymer and
chemical grade)
Polypropylene (2)
Carpet-backing, luggage, bottles,
diapers, raffia bags
Acrylonitrile
Clothing, plastics
Propylene oxide
Polyurethane foams for furniture
and insulation, cleaning compounds
and coatings
Oxo alcohol
Plasticizers
Butadiene
Synthetic rubber, elastomers, resins
Tires, shoes, hoses, surgical gloves
Butene-1
Linear low density polyethylene (2)
Garbage bags, packaging film, toys,
housewares, electrical insulation,
paper coatings
Aromatics
Benzene
Ethylbenzene (used to make styrene
monomer/polysterene)
Disposable cups, containers,
high-impact plastics
Cumene
Epoxies
Cyclohexane (3)
Nylon
28
Table of Contents
Braskem's products
Intermediate products
Most common end uses
Linear Alkyle Benzene
Detergents
Isoprene
Styrene-isoprene-styrene (SIS)
Adhesive
Toluene
Toluenediisocianate (TDI)
Urethane foams
Solvents
Para-xylene
Purified terephtahlic acid and
Dimethyl terephthalate (DMT) (3)
Polyester film and fibers, PET
resin (3)
Ortho-xylene
Phthalic anhydride and plasticizers
Flexible products from PVC
Others
MTBE
—
Octane booster for gasoline
Solvent C9
—
Solvents and thinners
Pyrolysis C9
—
Octane booster for gasoline
Fuels
Automotive Gasoline
—
Fuel for internal-combustion engines
LPG
Cooking gas
(1)
Produced by the Vinyls Unit. See "—Overview of the Company's
Operations—The Vinyls Unit."
(2)
Produced by the Polyolefins Unit. See "—Overview of the Company's
Operations—The Polyolefins Unit."
(3)
Produced by the Business Development Unit. See "—Overview of the
Company's Operations—The Business Development Unit."
Olefins.
Polymer grade ethylene and propylene, known as monomers, are the
Company's primary olefins products and are building blocks for many types of
plastics and resins. Ethylene and propylene serve as the chemical "backbone"
for many consumer products. Different combinations of monomers are polymerized
or linked together to form polymers or plastic resins, with varying properties
and characteristics.
The production of olefins involves the heating, compression, cooling and
separation of the streams that are generated from naphtha, natural gas or
gasoil under controlled temperature and pressure conditions. The Company's
Basic Petrochemicals Unit uses naphtha as its primary basic petrochemical
feedstock. The Company's production of olefins begins with "cracking," a
conversion process by which naphtha is heated in furnaces causing long-chain
naphtha molecules to split into short chain molecules or to transform into
other molecules in gaseous form. The gases produced are cooled, and then, a
distillation process separates the heaviest materials (pyrolysis residue,
pyrolysis gas oil and pyrolysis gasoline) from the lighter gases. The
pyrolysis gasoline, after a hydrogenation process, is sent to the aromatics
extraction unit where it is used as feedstock in the production of aromatics.
The remaining gases are further cooled and compressed. The resulting products
are then sent to the Company's fractionation and purification unit where they
are distilled for the recovery of high purity ethylene and propylene. High
purity butadiene is obtained following cryogenic fractionation in the butadiene
recovery unit. MTBE is produced by processing the remaining material from the
butadiene recovery unit with methanol.
Aromatics.
Naphtha is also used as feedstock for the production of
aromatics. The production of aromatics, known as "catalytic reformation,"
involves inducing a chemical reaction by pumping the naphtha through reactors
under controlled temperature and pressure conditions in the presence of
chemical catalysts. The catalytic reformation unit produces two aromatic
streams: light aromatic stream and heavy aromatic stream. The light aromatic
stream moves to the aromatics extraction unit where, together with the
pyrolysis gasoline produced during the olefin production process and in the
presence of special solvents, an aromatic mixture called BTX extract is
produced. BTX extract is then separated in the aromatics fractionation unit to
yield high purity benzene, toluene and xylenes. The xylenes stream is
subjected to separation and isomerization together with the "heavy aromatic
stream" from the catalytic reformation unit to produce para-xylene,
ortho-xylene, mixed xylenes and Solvent C9. Processing of the toluene stream
in the toluene transalkylation unit can vary the amount of benzene, toluene and
xylenes.
29
Table of Contents
Fuels.
As by-products of its production of basic petrochemicals, the
Basic Petrochemicals Unit also produces gasoline and LPG. The Company has been
authorized by the ANP to produce and sell automotive gasoline and LPG in the
domestic and international markets since August 15, 2000 and October 2, 2001,
respectively. The Company expects to be authorized by ANP to produce and sell
diesel fuel.
Utilities.
As by-products of its production of basic petrochemicals, the
Company also produces electric power, steam, compressed air and drinking and
demineralized water (together, "Utilities"), which are used in the Company's
own production process, including those of the Polyolefins Unit and the Vinyls
Unit, and are also sold to approximately 40 companies in the Northeastern
Complex. The Company's Utilities facilities consist of units for
thermoelectric power generation, water trapping and adduction, water treatment,
and the production of steam and compressed air.
Braskem generates an average of approximately 50% of the Northeastern
Complex's electricity consumption requirements, and CHESF-Companhia
Hidroelétrica do São Francisco ("CHESF"), an electric power generation company
located in the State of Bahia and serving the States of Alagoas and Bahia,
furnishes the remainder.
Production Capacity of the Basic Petrochemicals Unit
The table below sets forth the location, main products, production
capacity and tons produced for the periods presented for the Company's basic
petrochemicals units and plants.
Production
Main
Production
Year Ended December 31,
Name
Products
Capacity
2002
2001
(in tons)
(in tons)
Olefins Units 1 and 2
Ethylene
1,200,000
989,276
1,069,724
Propylene
548,000
464,521
491,957
Plants of Aromatics Units 1 and
2 (1):
Butadiene Plants 1 and 2
Butadiene
170,000
137,976
143,700
MTBE Plants 1 and 2
MTBE
156,000
106,449
108,251
1-Butene Plant
1-Butene
31,000
20,530
—
Isoprene Plant
Isoprene
18,000
16,380
—
Dicyclopentadiene (2)
19,000
19,799
18,897
Sulfolane Plants 1, 2 and 3
Coperaf-1 (3)
120,000
116,575
102,848
BTX Fractionation Plants 1 and 2
Benzene
370,000
318,373
317,223
Toluene (2)
75,000
129,200
173,960
C8+ Fractionation Plant
Mixed Xylenes (2)
40,000
62,679
50,137
Ortho-Xylene
60,000
48,135
46,001
Solvent C9 (3)
24,000
6,803
3,455
Parex Plant
Para-Xylene
150,000
101,426
107,321
Blending Plant
Motor Gasoline (4)
600,000
326,493
351,806
Liquified Petroleum Gas (4)
60,000
30,780
4,553
(1)
The Company's Basic Petrochemical Unit defines the term "unit" to mean
several plants that are linked together in order to produce other olefins
or aromatics. Accordingly, the production capacity of Aromatics Units 1
and 2 is the sum of the production capacities of the various plants that
form part of the units.
(2)
Actual production may exceed production capacity of certain plants when
excess capacity is available in and borrowed from other plants in the
Aromatics Units.
(3)
Solvents.
(4)
Motor gasoline and liquified petroleum gas production in cubic meters per
year.
The Company has two olefins units that produce ethylene and propylene. An
olefins unit is divided into three sections: the hot section; the compression
section; and the cold section. The hot section comprises the
pyrolysis heaters, which are the thermo-reactors in which the liquid naphtha is
evaporated in the convection section and is cracked in the radiation section.
The effluent from the heaters goes to the hot section fractionation plant where
the gases are separated from the pyrolysis gasoline and pyrolysis residue. The
gases from the hot section go to the charge gas compressor, where they are
compressed and sent to the cold section. In the cold section, the compressed
gas is fractionated into many components, such as methane, hydrogen, ethylene,
propylene, C-4 stream and pyrolysis gasoline. The cold section also contains
propylene and ethylene compressors, used as the main equipment for two auxiliary
systems to refrigerate other equipment.
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The first olefin plant commenced operations in 1978. This plant uses ABB
Lummus Global technology and had an original annual capacity of 388,000 tons
and 200,000 tons of ethylene and propylene, respectively. The Company is in
the process of its third debottlenecking process at this plant, which will
result in nominal annual capacity of 545,000 tons of ethylene and 258,000 tons
of propylene, by the end of 2003. The second olefin plant commenced operation
in 1992. This plant uses technology developed jointly by CENPES (Petrobras
Research Center) and ABB Lummus Global for the hot section and technology
developed by TECHNIP (a major French ethylene technology licensor) for the
compression and cold sections of the plant. This plant had an original annual
capacity of 450,000 tons and 290,000 tons of ethylene and polypropylene,
respectively. However, the Company has increased its capacity to 655,000 tons
of ethylene.
The Company is completing an improvement of the Olefins 1 unit in 2002
that will increase the installed capacity of the unit and modernize and upgrade
the technology of the unit. The Company shut down the pyrolysis plant that is
part of the Olefins 1 unit for 92 days in 2002 for regular maintenance and
expansion, resulting in reduced overall ethylene and propylene production
during that year. The cost of these improvements in 2002 was approximately
U.S.$61 million.
The Company has two butadiene plants that receive the C4 stream from its
olefins plants and separate butadiene as a main stream through an extraction
process, using DMF as a solvent. The secondary stream is called raffinate 1
and serves as feedstock for the MTBE unit. The Company's first butadiene unit
commenced operation in 1978 and uses Nippon Zeon technology. The Company's
second butadiene unit commenced operation in 1992 and uses technology developed
by the Company's predecessor, Copene.
The Company has two MTBE plants. The iso-butene from the raffinate 1
stream produced by the Company's butadiene plants and from methanol, purchased
from third parties, react to produce MTBE as a main stream and raffinate 2 as a
secondary stream. The Company's first MTBE plant commenced operations in 1987,
and its second MTBE plant commenced operations in 1992. Both plants use
Petroflex technology.
The Company has one 1-butene plant that receives the raffinate 2 stream
from the Company's MTBE plants and subjects it to a super-fractionation process
in which 1-butene is the main stream and raffinate 3 is the secondary stream
that can be used in the production of liquified petroleum gas. The Company's
1-butene plant commenced operation in 1992 and uses technology developed by
Braskem's predecessor, Copene.
The Company has two DPG plants that receive the pyrolysis gasoline from
the Company's olefins plants and separate the C5 stream from the pyrolysis
gasoline before it goes to the hydrogenation reactors and the Company's
isoprene unit or sulfolane plant. In the DPG plants, the pyrolysis gasoline
stream goes to the first hydrogenation reactor where C5 (if any) is
fractionated from mono-hydrogenated gasoline, which goes to the second
hydrogenation reactor. The product of the second reactor is a stream rich in
BTX (benzene, toluene and xylenes).
The Company's first DPG plant commenced operations in 1978 and uses ABB
Global Lummus technology. The Company's second DPG plant commenced operations
in 1992 and uses technology developed jointly by Copene and the French
Institute of Petroleum.
The Company's has one isoprene plant that receives the dehydrogenated C5
stream from the Company's DPG units and performs a fractionation process that
produces isoprene as the main product and a secondary stream of C5 raffinate,
which can be used as feedstock for the pyrolysis heaters of the Company's
olefins plants or used in the production of automotive gasoline. The Company's isoprene plant commenced
operations in 1991 and uses technology developed by Japan Synthetic Rubber
Company.
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The Company has three sulfolane plants that process the BTX stream from
the DPG plants or from the catalytic reformation plant. Two of Braskem's
sulfolane plants are used to extract BTX from gasoline produced in the second
hydrogenation reactor of the DPG plants. Their main product is the BTX
aromatic stream, and their secondary product is PGH raffinate, which is used in
gasoline production or sold in the solvent markets. The Company's third
sulfolane plant processes the BTX aromatic stream from the catalytic
reformation plant. Its main product is the BTX aromatic stream and its
secondary product is raffinate. The Company's first two sulfolane plants
commenced operations in 1978 and use technology developed by Universal Oil
Products ("UOP"). The Company's third sulfolane plant commenced operations in
1988 and uses technology developed by Braskem's predecessor, Copene.
The Company has two BTX fractionation plants that receive BTX from the
sulfolane plants and fractionate it into benzene, toluene and C8+. The first
BTX fractionation plant commenced operations in 1978 and uses UOP technology.
The second BTX fractionation plant commenced operations in 1988 and uses
technology developed by the Company's predecessor, Copene.
The Company has one catalytic reformation plant that receives medium
naphtha from the naphtha fractionation plant. The catalytic reformation plant
uses five reactor systems, loaded with platinum (Pt) catalyst, that convert
non-aromatic products into aromatic products. Its main products are light
aromatic stream (BTX rich stream) and heavy aromatic stream (C8+ stream), which
are sent to the Company's sulfolane plants and the C8+ fractionation plant,
respectively.
The Company has one naphtha fractionation plant that receives (1) full
range naphtha and produces medium naphtha that is sent to the Company's
catalytic reformation plant and (2) light and heavy naphtha that may be used as
feedstock for the Company's olefins plants or used in the blending plant for
gasoline production. This plant commenced operations in 1998 and uses
technology developed by the Company's predecessor, Copene.
The Company has one C8+ fractionation plant that receives C8+ from the
catalytic reformation plant and the BTX fractionation plants, fractionates it
into xylenes and C9 stream, and sends the xylenes to the parex plant. It
commenced operations in 1998 and uses technology developed by the Company's
predecessor, Copene.
The Company has one parex plant that separates para-xylene from the blend
of ortho-xylene, metha-xylene and para-xylene contained in the streams from the
C8+ fractionation unit by using molecular sieves. Braskem's parex plant
commenced operations in 1978 and uses UOP technology.
The Company has one isomar plant that converts ortho- and metha-xylenes
into para-xylene through an isomarization process that uses special catalysts.
The Company's isomar unit commenced operations in 1978 and uses UOP technology.
Together with the parex plant and the C8+ fractionation plant, the isomar
plant forms the C8 loop system, a process cycle that yields para-xylene and
other xylenes.
Braskem also has a plant that uses a disproportionation process with
special catalysts to convert toluene into benzene and xylenes with a high
content of para-xylene. This plant commenced operations in 1998 and uses
technology licensed by Mobil.
Maintenance of Basic Petrochemicals Unit Plants
Until April 1998, maintenance services for the Company's basic
petrochemicals plants were carried out exclusively by CEMAN - Central de
Manutenção Ltda. ("Ceman"), a wholly owned subsidiary of the Company
specialized in industrial maintenance. Ceman also supplied personnel to the
Basic Petrochemicals Unit for day-to-day activities and for periodic
maintenance. However, in April 1998, the Company's predecessor, Copene,
decided to administer and perform part of its own maintenance services.
Accordingly, Copene hired 163 employees, formed its own maintenance team and
limited the scope of the maintenance contract with Ceman.
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Table of Contents
Copene sold the assets of Ceman to Asea Brown Boveri Ltd. – ABB in April
1999. Although the assets of Ceman were sold, the Company (as successor of
Copene) remains responsible for Ceman's liabilities for the period before 1999.
The Company has since entered into a new maintenance contract with ABB and has
entered into maintenance contracts with other service providers.
Because the Company has two independent olefins plants, uninterrupted
production of ethylene and propylene may continue, even while maintenance
services are being performed. In addition, other brief stoppages of operations
that do not materially affect production output may take place, primarily for
maintenance purposes, catalyst regeneration and equipment cleaning. Regular
plant maintenance requires complete plant shutdowns from time to time, which
usually take approximately 30 days to complete. Since commencing operations in
July 1978, the Company's largest Basic Petrochemicals plant has undergone seven
scheduled major maintenance shutdowns as part of the Company's regular
maintenance policy. The last general shutdown, in July and August 2001, was
carried out in the Company's first ethylene production unit and lasted 25 days.
This shutdown permitted inspection and maintenance of this unit, which had
been operational for almost five years, and was intended to return the plant to
its optimum efficiency and capacity. The cost of servicing the unit was
approximately U.S.$15 million (not including the value of lost production
during this shutdown). In 2002, the Company also shut down the pryolysis plant
that is part of its Olefins 1 Unit for 92 days for scheduled maintenance and in
order to increase the installed capacity of the unit and to modernize and
upgrade the unit technologically. This shutdown resulted in reduced ethylene
and propylene by the Basic Petrochemicals Unit in 2002. The cost of these
improvements to the unit was approximately U.S.$61.0 million. The next general
shutdown has been scheduled for the pyrolysis plant that is part of the Olefins
2 Unit, the smaller of the Company's two ethylene plants, in November 2003,
with an estimated duration of 25 days and an estimated total cost of U.S.$14
million.
Raw Materials of the Basic Petrochemicals Unit
Naphtha, a crude oil-based product, represents the principal production
and operating cost of the Basic Petrochemicals Unit. The price of naphtha
varies primarily based on changes in the U.S. dollar-based international price
of crude oil.
Until recently, Petrobras exercised a monopoly over the research,
exploration, production, refining, importation and transportation of crude oil
and refined petroleum products in Brazil, including naphtha. In November 1995,
the Brazilian Congress approved an amendment to the Brazilian Constitution to
allow, among other activities, private sector entities in Brazil to conduct
certain activities that had been performed solely by Petrobras. On August 6,
1997, the Brazilian Congress approved Law No. 9,478, aimed at liberalizing
Petrobras's monopoly and fostering competition in the oil and gas business in
Brazil. This law created the ANP, which regulates oil-related activities in
Brazil. The ANP has implemented rules and regulations that are intended to
encourage the gradual liberalization of the Brazilian petroleum market.
On August 9, 2000, the ANP ended Petrobras's monopoly over the supply of
naphtha in Brazil and implemented a policy of free naphtha price negotiation.
After two months of negotiations, the Brazilian basic petrochemicals producers
and Petrobras entered into a pricing agreement, and a pricing formula for
naphtha was established. According to this formula, the price of naphtha
supplied by Petrobras is linked to ARA quotations of naphtha's price and to the
U.S. dollar-
real
exchange rate. The price of naphtha in Brazil was U.S.$179.37
per ton in December 2001. The price increased significantly in 2002, reaching
a high of U.S.$268.95 per ton in November 2002, due primarily to the threat of
war between the United States and Iraq.
Both of Braskem's olefins plants currently use naphtha almost exclusively
as a feedstock, although both plants are capable of using natural gas, to a
limited extent, as a feedstock. Until the early 1980s, approximately 60% of
feedstock used by first generation producers in Brazil was gas oil and 40% was
naphtha, but the increased use of diesel fuel by trucks and buses in Brazil in
the 1980s reduced the supply of gasoil available to the first generation
producers. Currently, Braskem uses naphtha as its primary feedstock, and in
2002, naphtha accounted for approximately (1) 90% of the Basic Petrochemical
Unit's total variable cost of sales and (2) 66% of its total cost of sales,
including naphtha purchased by the Company's Basic Petrochemicals Unit and
naphtha used to produce the ethylene that the Company's Polyolefins Unit
purchases from Copesul. However, due to the high price of naphtha, the Company is preparing to process alternate raw materials such as
petroleum condensate, liquified petroleum gas and extra-light crude oil.
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The following table shows the ARA price of naphtha for the periods
indicated.
Price of Naphtha
2002
2001
2000
(in U.S. dollars per ton)
Average
228.00
215.92
263.25
Month ended
January
173.00
267.50
252.00
February
205.00
255.50
277.00
March
225.00
240.00
241.00
April
225.00
275.00
215.00
May
210.00
268.00
267.50
June
218.50
221.00
277.50
July
232.00
191.00
252.00
August
247.50
215.00
276.00
September
255.00
183.00
286.00
October
230.00
162.50
286.50
November
228.00
145.00
303.00
December
287.00
167.50
225.50
As a result of the deregulation of Petrobras's monopoly over the supply of
naphtha, Braskem made investments in an aggregate amount of approximately
U.S.$37 million in its transportation infrastructure to enable the Port of
Aratu to receive shipments of imported naphtha. On December 31, 2001, the
Basic Petrochemicals Unit received its first shipment of imported naphtha.
During the years ended December 31, 2002 and 2001, the Basic
Petrochemicals Unit purchased:
•
2,778 thousand tons of naphtha, representing 72.4% of its naphtha
requirements, and 4,087 thousand tons representing 99.1% of its naphtha
requirements, respectively, from Petrobras; and
•
1,059 thousand tons of naphtha, representing 27.6% of its naphtha
requirements, and 35 thousand tons, representing 0.9% of its naphtha
requirements, respectively, through imports of naphtha from suppliers
located principally in Africa and elsewhere in South America.
The current supply contract with Petrobras was initially entered into in
1978, had an initial duration of 10 years and is automatically renewable
thereafter for further 10 year periods. The current term expires in 2008. The
Company intends to import approximately 30% of its annual naphtha requirements
in the future.
Sales and Marketing of Basic Petrochemical Products
The following table sets forth, for the years ended December 31, 2002,
2001, and 2000, certain information regarding net sales of the Company's Basic
Petrochemicals Unit.
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Table of Contents
Year ended December 31,
2002
2001
2000
Quantities
Quantities
Quantities
sold
Net Sales
sold
Net Sales
sold
Net Sales
(thousands of
(millions of
(thousands
(millions of
(thousands of
(millions of
tons)
U.S. dollars)
(%)
of tons)
U.S. dollars)
(%)
tons)
U.S. dollars)
(%)
Domestic Sales
994.8
412.7
42.6
1064.8
514.4
42.4
1103.8
636.3
44.5
Ethylene(1)
994.8
412.7
42.6
1064.8
514.4
42.4
1103.8
636.3
44.5
Propylene(2)
415.2
147.2
15.2
421.1
148.4
12.2
487.7
228.3
16.0
Para-xylene(3)
99.4
38.3
5.7
114.8
55.7
4.6
128.4
61.2
4.3
Benzene(4)
223.5
67.3
3.9
223.2
66.3
5.5
233.8
85.8
6.0
Butadiene
147.3
55.6
6.9
134.5
65.0
5.4
153.1
68.7
4.8
Mixed xylenes
52.9
17.2
2.6
50.6
19.0
1.6
51.2
19.6
1.4
Ortho-xylene
48.9
20.3
2.1
41.9
17.7
1.5
36.9
16.1
1.1
Toluene
78.7
24.9
1.8
108.0
34.9
2.9
55.7
18.9
1.3
Others
—
85.4
8.8
—
84.9
7.0
—
128.4
9.0
Total domestic net sales
—
868.8
89.7
—
1006.4
89.3
—
1263.3
88.3
Total export net sales
—
99.8
10.3
—
121.0
10.7
—
167.7
11.7
Total basic petrochemicals net
sales
—
968.6
100.0
—
1127.4
100.0
—
1431.0
100
(1)
Includes 471.9 thousand tons and 378.9 thousand tons of ethylene
transferred to other business units of the Company during 2002 and 2001,
respectively.
(2)
Includes 27.0 thousand tons and 19.6 thousand tons of propylene
transferred to other business units of the Company during 2002 and 2001,
respectively.
(3)
Includes 45.2 thousand tons and 39.2 thousand tons of para-xylene
transferred to other business units of the Company during 2002 and 2001,
respectively.
(4)
Includes 65.4 thousand tons and 49.0 thousand tons of benzene transferred
to other business units of the Company during 2002 and 2001, respectively.
Net
sales of basic petrochemicals accounted for 38.8% and 42.2% of the
Company's net revenues on a combined basis for the years ended December 31,
2002 and 2001, respectively, giving effect to the Nova Camaçari Acquisition and
the Related Party Mergers as if they had occurred on January 1, 2001. During
the year ended December 31, 2000, net sales of basic petrochemicals accounted
for 91.8% of Copene's net revenues.
During the year ended December 31, 2002, net sales of basic petrochemicals
in Brazil accounted for U.S.$868.8 million, representing 77.1% of the Basic
Petrochemicals Unit's total net sales. In 2002, net sales of gasoline in the
domestic market (not included in the table above) were U.S.$ 24.0 million. In
the same year, exports sales by the Basic Petrochemicals Unit (including
gasoline sales of U.S.$27.7 million) accounted for approximately U.S.$127.6
million representing 11.3% of the Basic Petrochemicals Unit's net sales.
The Company sells its basic petrochemicals products in Brazil mainly to
second generation producers located in the Northeastern Complex as well as to
customers in the United States and Europe. As is common with other first
generation petrochemical producers in Brazil, the Company's Basic
Petrochemicals Unit has a high concentration of sales of basic petrochemicals
to a limited number of customers.
As part of the Company's strategy following its formation in August 2002,
its Basic Petrochemicals Unit has focused on developing longer-term
relationships with its customers. The Company has entered into long-term
supply contracts with several second generation producers located in the
Northeastern Complex. These supply contracts generally have an initial 10-year
term that is automatically renewable for five-year periods, unless one party
notifies the other of its intention not to renew. The contracts provide for
minimum and maximum quantities and monthly deliveries. The Company also sells
liquified petroleum gasoline and automotive gasoline to Petrobras pursuant to a
long-term contract.
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Table of Contents
The Company determines the prices for its olefins and aromatics products
with reference to several market factors. The price of ethylene that the
Company charges is based on a margin sharing system. Under this system, the
benefit or burden of higher or lower prices for ethylene derivatives, such as
polyethylene, is shared between the Company and its customers. Conversely, the
benefit or burden of higher or lower prices of naphtha will also be shared with
the Company's customers. The margin to be shared by first and second
generation producers is calculated for each second generation product based on
the market price charged by the second generation producer for its polyolefin
resins. The market price for ethylene is based on benchmark costs imputed to,
and actual costs incurred by, both first and second generation producers for
the production of second generation products. The benchmark cost factors
considered in determining the cost margin are the fixed costs, including
depreciation, of leading first and second generation producers located in
Europe. European producers are included in the calculation because, like
Brazilian producers, they use naphtha as their primary feedstock (whereas first
generation producers in the United States use natural gas as a feedstock for
ethylene). Actual variable costs incurred by first and second generation
producers are also used in calculating the price of ethylene. The margin for
each product is determined by subtracting the production cost of each product
from the average market price charged by the second generation producers for
such product. This margin is then divided between the relevant first and
second generation producers on a
pro rata
basis to reflect the relative capital
investments made by the first and second generation producers in the production
process for each product. The actual margins realized by the first and second
generation producers depend on the degree to which their actual costs compare
with the benchmark costs used in the pricing formula to calculate the margin.
The Company calculates the monthly price of propylene by multiplying the
monthly ethylene price it charges (including Brazilian taxes) by the ratio of
the European contract price for propylene to the European contract price for
ethylene. The Company determines the price of butadiene by using the European
contract price for butadiene and its prices, unlike prices for the other basic
petrochemical products, include freight costs. The Company sets the prices of
solvents, fuels and Utilities with reference to domestic Brazilian prices for
these items.
The Basic Petrochemical Unit's volume of export sales has, in large part,
traditionally been a function of domestic demand for the Company's products.
Export sales represented 11.3% of the Basic Petrochemicals Unit's net sales in
2002 and 9.1% in 2001. These sales were made mainly to customers in Europe and
the United States. The Company's management believes that the Company's
natural market for basic petrochemicals is Brazil, although it intends to
increase export sales of automotive gasoline to the United States. The
Company's main focus is to maintain its leading position in the Brazilian
market, while continuing to use its export operations to manage the
relationship between installed capacity and domestic demand. The Company
believes that its continued presence in the export markets is essential to
manage overcapacity relating to the Brazilian market.
The
Company sets export prices for: (1) benzene, toluene, MTBE and gasoline
with reference to prices prevailing in the U.S. Gulf market; (2) propylene,
para-xylene, ortho-xylene and butene-1 with reference to prices prevailing in
the European market; and (3) ethylene and butadiene on the basis of a derivative
pricing formula.
In addition to petrochemicals, Braskem produces Utilities for its own use
and for sale to other second generation producers in the Northeastern Complex.
The following table sets forth, for the years ended December 31, 2002, 2001 and
2000, certain information regarding the Basic Petrochemicals Unit's sales of
Utilities.
Year ended December 31,
2002
2001
2000
Quantities
Quantities
Quantities
sold
Net Sales
sold
Net Sales
sold
Net Sales
(millions
(millions
(millions
of U.S.
of U.S.
of U.S.
dollars)
(%)
dollars)
(%)
dollars)
(%)
Electricity (1,000 MWh)
1,264.4
38.1
35.
7
1,437.5
50.8
42.6
1,368.9
46.4
37.4
Steam (1,000 tons)
4,044.0
59.8
56.0
3,944.0
59.0
49.6
3,903.7
68.7
55.4
Treated water (1,000 m
3
)
15,742.0
5.4
5.1
16,309,2
5.6
4.7
16,211.0
5.9
4.8
Compressed air (1,000 Nm
3
)
205,515.0
3.5
3.3
202,602.9
3.6
3.1
199,158.0
3.0
2.4
Total sales of utilities
—
106.8
100.0
—
119.0
100.0
—
124.0
100.0
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Net sales of Utilities accounted for 4.3% and 4.5% of the Company's net
revenues on a combined basis for the year ended December 31, 2002 and 2001,
respectively. During the year ended December 31, 2002, net sales of Utilities
accounted for U.S.$106.8 million, representing 9.5% of the Basic Petrochemicals
Unit's net sales.
Since August 15, 2000, Braskem has been authorized by the ANP to produce
and sell automotive gasoline. In October 2001, in addition to gasoline, the
Company was authorized to produce and sell LPG. Net sales of fuels amounted to
U.S.$51.7 million in 2002, as compared to U.S.$84.5 million in 2001,
corresponding to 6.4% and 4.6% of the Basic Petrochemicals Unit net revenue for
these years, respectively.
Sales of type "A" gasoline reached 324,000 cubic meters in 2002, compared
to 349,000 cubic meters in 2001, representing a decrease of 7%. Over the last
two years, the Company has been consolidating its position as a reliable
gasoline supplier in the Northeastern States of Pernambuco, Bahia, Paraiba and
Alagoas. The Company's participation in the gasoline market in the
Northeastern region of Brazil reached 6% in 2002.
Braskem's services business involves the storage of gaseous petrochemical
products for companies located in the Northeastern Complex and is undertaken by
Braskem's controlled subsidiary, Tegal. Tegal is located in the port terminal
of Aratu in the State of Bahia.
Competition
Although there are currently three major petrochemical complexes in
Brazil, Braskem's basic petrochemicals customers, which are mostly second
generation petrochemical producers with plants located in the Northeastern
Complex, are unlikely to be able to obtain their feedstocks elsewhere at lower
prices due to high transportation costs and logistical difficulties. Because
ethylene requires cryogenic storage and transportation, at temperatures below
-100º Celsius, exporting and importing ethylene is extremely costly.
Because propylene may be compressed, it is generally less costly to import or
export than ethylene. In addition, because Brazil is self-sufficient in the
production of olefins, imports of these products are sporadic and generally
associated with scheduled plant maintenance shutdowns. In 2002, a very small
amount of ethylene was imported into Brazil.
The Polyolefins Unit
The Company's Polyolefins Unit is comprised of the operations of Polialden
and the operations conducted by OPP Química prior to its merger with and into
the Company. Prior to the OPP Merger on August 16, 2002, the only operations
of the Polyolefins Unit were those conducted by Polialden. Prior to the Nova
Camaçari Acquisition on July 25, 2001, the Company did not conduct any
polyolefins operations. The results of Polialden are included in the
Consolidated Financial Statements for periods after July 25, 2001, the date of
the Nova Camaçari Acquisition. Although the Company acquired OPP Química on
August 16, 2002, the results of OPP Química are included in the Consolidated
Financial Statements in a manner similar to a pooling-of-interests for periods
after July 25, 2001 as a result of the common control exercised by the
Odebrecht Group over the Company and OPP Produtos after July 25, 2001, the date
of the Nova Camaçari Acquisition and the date on which such common control had
commenced. See "History and Development of the Company" and "Item 5. Operating
and Financial Review and Prospects—The Auction, the Nova Camaçari Acquisition
and the Related Party Mergers." Historical financial information with respect
to the Polyolefins Unit is set forth in Note 18 to the Consolidated Financial
Statements. The financial information with respect to the Polyolefins Unit
that is contained in this section is based on the combined historical results
of Polialden and OPP Química prepared in accordance with the Brazilian
Corporate Law and may not be indicative of the results that the Company's
Polyolefins Unit will achieve in the future.
The Company's polyolefin's operations are conducted at seven plants
located at two of Brazil's petrochemical complexes. Four plants are dedicated
to the production of polyethylene (two at the Southern Complex and two at the
Northeastern Complex), and three plants at the Southern Complex are dedicated
to the production of polypropylene.
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Products of the Polyolefins Unit
The following chart shows the major products produced by the Polyolefins
Unit and their most common end uses.
Company's Products
Most common end uses
Low density/linear low density Polyethylene
Garbage bags, packaging film, toys, housewares,
electrical insulation, paper coatings
High density polyethylene
Blow-molded and injection-molded plastic bottles
(such as milk bottles), crates, automotive fuel tanks
Polypropylene
Carpet-backing, luggage, bottles, diapers, raffia bags
Ultra High Molecular Weight Polyethylene
Compression-molded sheets, porous parts, ram-extruded
sheets, profiles, filters, rods
The manufacturing process of polyethylene and polypropylene generally
consists of compressing ethylene and propylene, respectively, in a high
pressure reactor. Catalysts are then added to the polymerization process,
producing polyethylene and polypropylene. After the polymerization process,
the polymers enter the decompression phase, during which additives are inserted
to provide the final characteristics of the polyethylene and polypropylene
resins.
Polyethylene has the simplest chemical structure of all commercial
polymers and is a very versatile material. World production volume of
polyethylene is the highest among all commercial plastics. Polyethylene is used
to manufacture a wide variety of products.
While each form of polyethylene is preferred for certain applications,
there is some overlap in the uses of these resins, and with certain
modifications, polyethylene resins may be substituted for each other in certain
end product manufacturing processes. For example, demand for linear low
density polyethylene has grown since first introduced in 1989 and reduced
demand for low density polyethylene as manufacturers of certain containers and
film applications have switched their processes and technology to use linear
low density polyethylene in a blend with low density polyethylene.
The Company produces a variety of polyethylene resins, including low
density polyethylene, linear low density polyethylene, high density
polyethylene and ethylene vinyl acetate copolymer. The manufacturing process
employed by its customers and the desired physical characteristics of the end
product determine the polyethylene resin used. Low density polyethylene is the
most flexible of polyethylene products and is used in a variety of film
applications and in food packaging, trash bags and shopping bags. Linear low
density polyethylene is used in applications requiring greater sealing capacity
and better mechanical resistance, including films and flexible food packaging.
For those applications that require rigidity, polyethylene offers the necessary
strength.
Production Capacity and Technology of the Polyolefins Unit
The table below sets forth the location, main products, production
capacity and tons produced for the years presented for each plant currently in
the Company's Polyolefins Unit.
Production (in tons)
Year Ended December 31,
Production
Location (Complex)
Main Products
Capacity (1)
2002
2001
(in tons)
Triunfo (Southern)
Low density polyethylene
210,000
203,354
194,060
Polypropylene (2)
100,000
—
—
Polypropylene
215,000
189,226
184,371
Polypropylene
235,000
215,120
192,316
High density
polyethylene/
linear low density
polyethylene (3)
300,000
216,171
197,319
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Production (in tons)
Year Ended December 31,
Production
Location (Complex)
Main Products
Capacity (1)
2002
2001
Camaçari (Northeastern)
High density polyethylene/
linear low density(3)
200,000
141,089
165,8
High density polyethylene /
Ultra High Molecular Weight
Polyethylene
130,000
103,892
125,441
(1)
Represents annual effective capacity in 2002.
(2)
This slurry plant is currently inactive.
(3)
Plant with swing line, capable of producing two types of resins.
Capacity varies depending on actual production.
The Company's polyethylene is produced at four plants, two located at the
Southern Complex and two located at the Northeastern Complex. The Company's
first polyethylene plant, located at the Southern Complex, commenced operations
in 1982 and produces all of the Company's low density polyethylene. This plant
uses high-pressure Equistar technology on its autoclave line and tubular
technology on its second line. This plant had an original annual capacity of
120,000 tons, but it has since been debottlenecked to 210,000 tons.
The second polyethylene plant located at the Southern Complex, which
commenced operations in 1999, is a 300,000 ton high density polyethylene/linear
low density polyethylene swing plant that uses low-pressure Spherilene®
technology licensed from Basell (formerly known as Montell). The Company
entered into a license agreement for the Spherilene® technology that requires
the payment of certain fees and annual royalties based on the amounts of linear
low density polyethylene produced at this plant.
One of the polyethylene plants located at the Northeastern Complex is
capable of producing both high density polyethylene and linear low density
polyethylene on its two production lines. This plant uses Unipol®
low-pressure, gas-phase technology, developed by Union Carbide Corporation.
The Company was granted a license in 1988, effective in 1992, to use Unipol®
catalyst technology. The license expires in 2007 and includes provisions for
purchase of catalysts by the Company during the term of the license. The
Company made a lump sum royalty payment at the time of execution of the license
and has no continuing royalty obligations. The Company pays for catalysts as
they are supplied. The other polyethylene plant in the Northeastern Complex
uses Mitsubishi® slurry technology and is capable of producing high density
polyethylene and ultra-high molecular weight polyethylene.
The Company produces polypropylene at three plants located at the Southern
Complex. Both the first bulk plant, which commenced operations in 1991, and
the second bulk plant, which commenced operations in 1997, use Spheripol®
technology developed by Basell. The Company entered into a license in 1987 to
use the Basell Spheripol® technology at its polypropylene plants, effective
upon the commencement of operations in 1991. Pursuant to this license, the
Company is allowed to use the technology for its current and future plants,
without paying any additional royalties (
e.g.
, the Company has satisfied its
royalties obligations under the agreement). The Company's first bulk plant had
an original annual capacity of 130,000 tons, but the Company has debottlenecked
to 215,000 tons. Similarly, the Company's second bulk plant had an original
annual capacity of 160,000 tons, but it has been debottlenecked to over 235,000
tons.
The Company's third polypropylene plant, which commenced operations in
1983, uses slurry technology developed by Hercules Inc. This plant had an
original annual capacity of 50,000 tons, but the Company has debottlenecked it
to over 100,000 tons. Although this plant uses older technology and is now
inactive, the Company's management believes that the quality of the products
produced by this plant is comparable to the quality of products produced by
plants with newer technology. Management intends to introduce new Spherizone®
technology in each of its polypropylene plants beginning in 2005 and 2006.
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Table of Contents
Maintenance of Polyolefins Unit Plants
The
Company has a regular maintenance program for each of its polyolefins
plants. Production at each polyolefins plant generally is shut down for 15 to
30 days every two years to allow for regular inspection and maintenance. Other
brief stoppages that do not materially affect production occasionally take
place for maintenance purposes. The Company coordinates the maintenance cycles
of its Polyolefins plants with those of its Basic Petrochemicals plants. While
its Basic Petrochemicals facilities must be shut down for up to 30 days for
scheduled maintenance, the Company's Polyolefins facilities are shut down for
shorter periods because the Company maintains feedstock storage facilities that
enable its polyolefin plants to operate for up to two weeks.
Research and Development
The Polyolefins Unit maintains technology, innovation and application
facilities at the Southern Complex. The Polyolefins Unit's staff of 132
employees seeks to (1) optimize the ease with which clients process the
products of the Polyolefins Unit, (2) identify new product market
opportunities, (3) increase existing capacity, (4) reduce operating costs and
(5) upgrade and optimize product technology in order to develop new products in
response to customer requirements.
The Polyolefins Unit maintains Spheripol®, Spherilene® and Unipol® pilot
plants in the Southern Complex and the Northeastern Complex. Two of the
Polyolefins Unit's three pilot plants operate at l/100 the scale of its
full-scale plants, and the other pilot plant operates at 1/200 the scale of its
full-scale plants. The Polyolefins Unit uses its pilot plants to test
potential efficiency-enhancing modifications to various stages of the
production process and new product formulations. Management believes that
these pilot plants give the Company a competitive advantage, as the Company's
competitors in Brazil do not maintain pilot plants.
The Polyolefins Unit maintains catalysis, polymerization and polymer
sciences laboratories in the Southern Complex and the Northeastern Complex.
These laboratories assist the Company to develop new and improve existing
(licensed or otherwise) catalysts and grades of portfolio resins. The Company
has developed or improved upon the majority of the polyethylene and
polypropylene products that it sells based on technology developed by the
Company.
The Polyolefins Unit maintains processing engineering and automation
centers in the Southern Complex and the Northeastern Complex. These centers
assist the Company in developing advanced process control technology that the
Company makes available for licensing through a partnership with Pavilion
Technology Inc. in the United States. These centers also assist the Company to
(1) reduce its variable costs, (2) achieve operational stability and (3)
increase its polyolefins production to optimal levels.
While the Polyolefins Unit does not engage in new process technology
research and development, it remains in regular contact with process technology
licensors to keep abreast of new technologies and improvements. The Company
tests new processes on a regular basis for potential licensing and follows
advances and trends in the petrochemical industry through its relationships
with Brazilian and international research universities and consortia, such as
the University of Wisconsin Polymerization Reaction Engineering Laboratory at
the University of Wisconsin-Madison. In addition, the Company maintains
ongoing contracts with licensors in order to receive and install improvements
developed for its existing processes.
As part of the Company's technology licensing arrangements, it has entered
into technology sharing agreements with its licensors, whereby it is required
to share with its licensors, and its licensors are required to share with it,
any improvements made in the Unipol®, Spheripol® and Spherilene® technologies.
The Company believes that the technology of the Polyolefins Unit allows
the Company to produce, and to compete with other producers of, very high
quality polyolefins products.
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Raw Materials of Polyolefins Unit
Ethylene
and Propylene.
The most significant direct costs associated with
the production of polyethylene and polypropylene are the cost of ethylene and
propylene, which together accounted for approximately 74% of the Company's
Polyolefins Unit's total cost of sales during the year ended December 31,
2002. In 2002, approximately 33% and 64% of these raw materials were supplied
by the Basic Petrochemicals Unit and Copesul, respectively. Because the cost
of storing and transporting ethylene and propylene is substantial and there is
inadequate infrastructure in Brazil for importing large quantities of ethylene
or propylene, the Polyolefins Unit is highly dependent on the supply of
ethylene and propylene supplied by the Basic Petrochemicals Unit and Copesul.
As of December 31, 2002, Copesul had an annual ethylene capacity of
1,350,000 tons and an annual propylene production capacity of 567,000 tons.
The Company has entered into a long-term ethylene and propylene supply
contract with Copesul that extends through 2007 and is automatically renewable
for additional five-year terms. The Company owns 29.5% of the total capital
stock of Copesul. The Company's ethylene purchases from Copesul are subject to
an annual minimum of 268,200 tons and an annual maximum of 451,000 tons, while
the Company's propylene purchases are subject to an annual minimum of 262,200
tons and an annual maximum of 439,500 tons, in each case subject to daily and
monthly limits. In 2002, the Company purchased approximately 388,000 tons of
ethylene and all of its requirements of propylene (approximately 390,000 tons)
from Copesul for the Company's polyolefins operation in the Southern Complex.
The Company negotiates the prices for the feedstocks for the Company's
polyolefins products with Copesul, based upon a pricing formula developed by the
Brazilian petrochemical industry. The pricing formula provides for a method of
cost margin sharing between the first generation and second generation
producers located at the respective petrochemical complexes. For a description
of the pricing of ethylene purchased by the Polyolefins Unit from the Basic
Petrochemicals Unit, see "—The Basic Petrochemicals Unit—Sales and Marketing of
Basic Petrochemical Products." The prices charged by Copesul for ethylene that
it supplies to the Polyolefins Unit are based on a similar formula.
The following table sets forth the average prices per ton paid by OPP
Química and Polialden for ethylene and propylene for the years indicated:
Year Ended December 31,
2002
2001
(U.S.$ per ton)
Ethylene (1)
415
483
Ethylene (2)
453
528
Propylene (1)
354
352
Propylene (2)
378
400
(1)
Ethylene and propylene supplied by Braskem's Basic Petrochemicals
Unit.
(2)
Ethylene and propylene supplied by Copesul.
In the production of linear low density polyethylene, the Company also
uses butene and hexene as raw materials. Butene is supplied by Copesul and by
the Basic Petrochemicals Unit, and the Company imports hexene from suppliers
located in South Africa.
Other
Materials.
In addition to overhead costs such as labor and
maintenance, other costs associated with the production of polyethylene and
polypropylene are for chemical catalysts, solvents and utilities, such as
electricity, water, steam and nitrogen.
The Unipol® plant in the Northeastern Complex uses catalysts, primarily
Philips and Ziegler-Natta, supplied to Braskem by Union Carbide under a 15-year
license. The high density polyethylene slurry plant produces its own catalysts. Akzo Chemicals Inc., which produces catalysts under a license
from Basell, supplies the Polyolefins Unit with catalysts for polypropylene
production on the bulk line in the Southern Complex. The Company imports some
catalysts from the United States and Europe. In addition, the Company has
invested in the production of its own catalysts for use in most of its existing
production processes, as it believes that increasing Braskem's production of
its own catalysts will decrease production costs and reduce the Company's
dependency on imported catalysts. The Company purchases other catalytic
agents, together with the inputs that the Company needs to produce its own
catalysts for its slurry plant in the Northeastern Complex (to produce high
density and ultra high molecular weight polyethylene) from various suppliers at
market prices.
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The Company's Basic Petrochemicals Unit supplies the Polyolefins Unit's
facilities in the Northeastern Complex with steam and water. Electricity is
supplied at both complexes by third parties pursuant to long-term contracts,
and in the Northeastern Complex by the Basic Petrochemicals Unit. Nitrogen is
supplied at the Northeastern Complex by independent third parties. Copesul and
a third party distributor supply the Southern Complex with nitrogen. The
Company's polyolefins plants in the Northeastern Complex are able to receive
electricity from alternate sources if the Company is unable to meet its demand
for electricity from its Basic Petrochemical Unit. The Company believes that
there are sufficient alternative sources available at reasonable prices for
these other inputs used in its polyolefins production process such that the
loss of any single supplier would not have a material adverse effect on the
Company's operations.
Sales and Marketing of Polyolefins Products
The following table sets forth, for the years ended December 31, 2002 and
2001, certain information regarding the combined net sales of Polialden and OPP
Química.
Year ended December 31,
2002
2001
Quantities
Quantities
sold
Net Sales
sold
Net Sales
(thousands of
(millions of
(thousands
(millions of
tons)
U.S. dollars)
(%)
of tons)
U.S. dollars)
(%)
Domestic Sales
Polypropylene
395.1
266.7
30.5
338.5
266.5
31.5
Low density polyethylene
133.0
94.2
10.8
116.5
101.0
11.9
Linear low density
polyethylene
130.1
92.5
10.6
124.7
103.2
12.2
High density polyethylene
227.7
158.3
18.2
250.7
204.0
24.1
Ultra high molecular
weight polyethylene
0.9
1.3
0.1
0.8
1.2
0.1
Others
—
—
—
2.2
2.6
0.3
Total domestic sales
886.8
613.0
70.2
833.4
678.4
80.1
Exports
—
260.7
29.8
—
168.8
19.9
Total polyolefins net sales
—
873.7
100.0
—
847.3
100.0
Net sales of the Polyolefins Unit accounted for 35.1% and 31.7% of the
Company's net revenues on a combined basis for the year ended December 31, 2002
and 2001, respectively.
As a result of the Company's acquisition in January 2002 of the ultra high
molecular weight polyethylene business of Basell in the United States and
Basell's Brazilian subsidiary, the Company became the world's second largest
producer of UHMWP, a high technical performance engineering plastic. Exports
of UHMWP increased by 186% in 2002, from 5,000 tons in 2001 to 14,300 tons in 2002, allowing the
Company to occupy an important strategic position in the markets for this
product in the United States and in Europe.
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As part of the Company's efforts to integrate the operations of OPP
Química into the Company, the Company's Polyolefins Unit has focused on
developing longer-term relationships with its customers. Recognizing the
cyclical nature of the markets for its commodity products, the Company believes
that it can strengthen customer loyalty during periods of low demand for
polyethylene or polypropylene by providing a reliable source of supply to these
customers during periods of high demand. Each account manager in the
Polyolefins Unit is assigned numerous customers within a particular geographic
area and works closely with these customers to determine their needs, to
provide technical assistance and to coordinate the production and delivery of
products with characteristics responsive to those needs. Customers submit
annual proposals giving their estimated monthly requirements for the upcoming
year for each of the Company's polyolefins products, including technical
specifications, delivery terms and proposed payment conditions. Account
managers evaluate these proposals monthly to make any required adjustments and
to monitor and ensure availability of supply for each customer.
In addition to direct sales to the Company's customers, the Polyolefins
Unit sells the Company's products through eight exclusive independent
distributors. These distributors sell polyethylene and polypropylene products
to manufacturers with lower volume requirements and can aggregate multiple
orders for production and delivery such that the Company and its ultimate
customers can share the cost savings. Furthermore, by serving smaller
customers through a network of distributors, account managers in the
Polyolefins Unit have been able to focus their efforts on delivering high
quality service to a smaller number of direct customers. The Polyolefins Unit
intends to continue to establish relationships with distributors that can
consolidate sales to smaller customers and to increase sales through these
distributors.
The Company determines the prices for its polyethylene and polypropylene
products with reference to several market factors that include the prices paid
by third generation producers for imports of these products and prevailing
market prices in Brazil.
The Company's volume of export sales traditionally has, in large part,
been a function of domestic demand for its products. Export sales represented
29.8% of the Polyolefins Unit's net sales in 2002 and 19.9% in 2001. These
sales were made mainly to customers in South America and, to a lesser extent,
in Asia, Africa, the Middle East and Europe.
The Company's main focus is to maintain its leading position in the
Brazilian market, while continuing to use the Company's export operations to
manage the relationship between its installed capacity and domestic demand for
its products. Currently, the Polyolefins Unit targets an annual average
production in excess of expected Brazilian market demand by approximately 20%
in order to meet variations in local demand and to respond to production
fluctuations, seasonality and export product sales. The Company believes that
its continued presence in the export markets is essential to manage
overcapacity in the Brazilian market.
The Company's principal export market for polyolefins is South America,
particularly the Mercosul countries, and the Company intends to increase its
focus on sales of polyolefins in the Mercosul countries as well as in Chile.
The Company has established a strategic position in the Southern Cone countries
through regular sales to local distributors and agents who are knowledgeable in
their respective markets. The Company's strategy to increase its presence in
the Southern Cone is intended, among other benefits, to reduce its exposure to
the cyclicality of the international spot market through the development of
long-term relationships with customers in neighboring countries. Export prices
for sales in the Southern Cone countries of South America are based on regional
prices, and these sales are made either with letters of credit or through bank
collections.
Export sales to buyers in countries outside the Southern Cone are based on
international prices. The Company's customer base consists primarily of
trading houses, most of which have operations in the United States or in Hong
Kong. All sales of this type are made with letters of credit.
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Competition
In 2002, imports of polyethylene into Brazil represented less than 17%
(11% in 2001) of Brazil's total consumption of polyethylene and less than 10%
(less than 10% in 2001) of Brazil's total consumption of polypropylene. The
Company anticipates that competition from international producers may increase
substantially, both in Brazil and in selected foreign markets in which the
Company plans to attempt to increase sales of its polyolefins products. For
example, Dow Chemical recently built a linear low density polyethylene facility
in Bahía Blanca, Argentina, which facility became operational in 2001 with an
annual capacity of 210,000 tons.
The Company competes with a small number of Brazilian polyolefins
producers and, to a lesser extent, with importers of these products. In the
Brazilian polyethylene market, the Company competes with a number of companies
that produce one or two of the products in its production line. Politeno, in
which the Company owns 35.0% of the voting captial stock,
representing 34.7% of the total capital stock, produces
the same range of polyolefins products as the Company. Low density
polyethylene is produced by Union Carbide do Brasil S.A., Petroquímica Triunfo
S.A. ("Triunfo") and Politeno, which in 2002 had installed capacities of
144,000 tons, 150,000 tons and 145,000 tons, respectively, compared to the
Company's installed capacity of 210,000 tons. However, the Company's
management believes that over the next few years, production of low density
polyethylene will be phased out and replaced by linear low density polyethylene
in the packaging segment. Accordingly, growth of the low density polyethylene
market should be limited, although reduced supply of low density polyethylene
may cause its price to exceed the price of linear low density polyethylene in
the short term.
Politeno and Ipiranga are the only other Brazilian producers of linear low
density polyethylene, and in 2002, they had installed annual capacity of
180,000 tons and 150,000 tons, respectively, at swing plants that are also
capable of producing high density polyethylene, compared to the Company's
installed annual capacity of 300,000 tons. Rio Polímeros, a Brazilian
petrochemical company, is constructing a petrochemical plant in Duque de
Caxias, Rio de Janeiro, with a capacity to produce annually 520,000 tons of
ethylene, 75,000 tons of propylene and 540,000 tons of linear low density
polyethylene and high density polyethylene, which will increase annual
aggregate Brazilian production capacity of polyethylene by 35%. The plant will
use natural gas as a feedstock, and Rio Polímeros has announced that it will
commence operations in July 2004.
Politeno, Ipiranga and Solvay also produce high density polyethylene. In
2002, these companies had installed high density polyethylene capacity of
180,000 tons, 500,000 tons and 82,000 tons, respectively.
In the Brazilian polypropylene market, the Company competes with Ipiranga,
Polibrasil (controlled by Basell, the largest polypropylene manufacturer in the
world and a leader in polypropylene technology, and Suzano) and Braspol
Polímeros S.A. These companies have combined installed annual capacity of
775,000 tons. In addition, Polibrasil is building a 300,000 ton polypropylene
plant in Mauá, São Paulo, which is expected to commence operations in the
second half of 2003.
The Company does not have any competitors in the Brazilian ultra high
molecular weight polyethylene market. Internationally, the Company's primary
competition in this market is Tacona (a business of German company, Celanese
AG), which has 52% of the world wide production capacity of ultra high
molecular weight polyethylene (twice the Company's production capacity).
The Vinyls Unit
The Company's Vinyls Unit is comprised of the operations of Trikem. Prior
to the OPP Produtos Merger on August 16, 2002, the Company did not conduct any
vinyls operations. Although the Company acquired Trikem on August 16, 2002,
the results of Trikem are included in the Consolidated Financial Statements in
a manner similar to a pooling-of-interests for periods after July 25, 2001 as a
result of the common control exercised by the Odebrecht Group over the Company
and Trikem after July 25, 2001, the date of the Nova Camaçari Acquisition and
the date on which such common control had commenced. See "History and
Development of the Company" and "Item 5. Operating and Financial Review and
Prospects—The Auction, the Nova Camaçari Acquisition and the Related Party
Mergers." Historical financial information with respect to the Vinyls Unit is
set forth in Note 18 to the Consolidated Financial Statements. The financial information with respect to the
Vinyls Unit contained in this section is based on the historical results of
Trikem prepared in accordance with Brazilian Corporate Law and may not be
indicative of the results that the Company's Vinyls Unit will achieve in the
future.
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Table of Contents
The Company's vinyls operations are conducted at five plants located in
the Brazilian States of Bahia, Alagoas and São Paulo. Three plants are
dedicated to the production of PVC, and two plants are dedicated to the
production of caustic soda and chlorine (with the latter also producing
ethylene dichloride).
Products of the Vinyls Unit
The following chart shows the major products produced by the Vinyls Unit
and their typical end uses.
Products
Typical end uses
Polyvinylchloride (PVC)
Pipes, sheeting, flooring, cable insulation,
electrical conduit, packaging, laminated products,
medical applications, toys, synthetic leather,
flooring materials, bottle caps and seals,
automobile corrosion prevention treatments and
wallpaper coatings
Caustic Soda
Aluminum, pulp and paper, petrochemicals and other
chemicals, soaps and detergents, waste treatment,
textiles, dyes, food processing and electroplating
Ethylene Dichloride
Polyvinylchloride (PVC)
Chlorine
Ethylene Dichloride
PVC. The Company's Vinyls Unit produces suspension and emulsion PVC in
various grades, as well as PVC copolymers. PVC is sold in bags and transported
to third generation producers by truck. Approximately 95% of the Company's PVC
production is in the form of suspension PVC. The grades of PVC produced by the
suspension process are the most widely used, including for use in the
manufacture of pipes, sheeting, flooring, cable insulation, electrical conduit,
packaging, laminated products and medical applications. PVC copolymers and
grades of PVC produced by the emulsion process are more specialized products
and are used in the manufacture of toys, synthetic leather, flooring materials,
bottle caps and seals, automobile corrosion prevention treatments and wallpaper
coatings. The Company's Vinyls Unit also produces ethylene dichloride, the
principal feedstock used in the production of PVC. The Company used
approximately 75% of its ethylene dichloride production in 2002 for further
processing into PVC and exported the remainder.
Caustic Soda and Chlorine. The Company's Vinyls Unit also produces
caustic soda and chlorine. Caustic soda is a basic commodity chemical that is
sold to producers of aluminum, pulp and paper, petrochemicals and other
chemicals, soaps and detergents and to waste treatment plants. Caustic soda is
also used in the textile industry to make fabrics more absorbent and improve
the strength of dyes and in food processing and electroplating. The Company's
other business units consume approximately 3% of the caustic soda produced by
the Vinyls Unit, and the remainder is sold to third parties.
Chlorine is a basic commodity chemical that is used in a large variety of
industries, with applications in water treatment and chemical and
pharmaceutical production. The Company consumes approximately 81% of the Vinyl
Unit's chlorine production in its production of ethylene dichloride. The
Company sells most of its remaining chlorine to a Brazilian company located
near the Northeastern Complex that is connected to the Company via a
specialized pipeline.
The manufacturing process of chlorine and caustic soda consists of the
electrolysis of sodium chloride brine, which produces free hydrogen, chlorine
and caustic soda in solution. The Company burns the hydrogen for power, and
separates and concentrates the chlorine and caustic soda. The Company combines
chlorine with ethylene to produce ethylene dichloride. Ethylene dichloride is
then "cracked" to produce vinylchloride monomer, which is polymerized to produce PVC. Suspension and emulsion are two of the
commercial methods for polymerizing PVC resin. In the suspension process, a
solution of vinylchloride monomer, catalysts, additives, dispersing agents and
water are agitated and heated for approximately 10 hours, producing a PVC-water
"clay" that is then dried into porous PVC particles. In the emulsion process,
different catalysts, additives and dispersing agents are used, creating a more
homogenous PVC-water "clay" that is similar to latex. The resulting PVC
particles are thinner and more compact than in the suspension process.
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Table of Contents
Production Capacity and Technology of the Vinyls Unit
The following table sets forth the location, main products, production
capacity and tons produced for the years presented for each plant currently in
the Company's vinyls unit.
Production
Production
Capacity (1)
Year Ended December 31,
Location (Complex)
Main Products
2002
2002
2001
(in tons)
Camaçari (Northeastern)
PVC
246,000
200,056
173,921
Camaçari (Northeastern)
Caustic Soda
73,000
68,964
70,420
Chlorine
64,000
61,206
62,497
Maceio (Alagoas)
Caustic Soda
460,000
370,600
331,198
Chlorine
400,000
342,700
314,091
EDC
520,000
443,955
393,803
Marechal Deodoro (Alagoas)
PVC
204,000
180,870
166,882
Vila Prudente (São Paulo)
PVC
25,000
20,654
20,932
(1)
Represents annual capacity effective in 2002.
The Company originally licensed its vinylchloride monomer manufacturing
technology from B.F. Goodrich Company and its PVC technology from Mitsubishi
Chemical Corporation. The Company also has three chlorine manufacturing
technology agreements with Denora (used in Bahia), Eltec (used in Alagoas) and
EVC (to produce ethylene dichloride in Alagoas). The Company no longer pays
license fees under any of the technology licenses used by the Vinyls Unit, and
there is no expiration date for any of the existing licenses used by the Vinyls
Unit. The production processes of the Vinyls Unit are not dependent on any
other licenses or patents from third parties. The Vinyls Unit also owns 11
patents and six trademarks in Brazil related to the Company's production of
PVC.
The
Camaçari Plants.
The Company's original PVC plant and one of its
chlorine and caustic soda plants are located at the Northeastern Complex. The
PVC plant produces a full range of grades of suspension PVC. It commenced
operations in August 1979, with an installed annual production capacity of
150,000 tons of suspension PVC, which the Company has since upgraded to 246,000
tons. The production technology for the Company's PVC manufacturing process
was supplied by Mitsubishi Chemical Corporation.
The Company's chlorine and caustic soda plant in the Northeastern Complex
commenced operations in March 1979. This plant had an original installed
annual production capacity of 35,700 tons of caustic soda, which the Company
has since expanded to 73,000 tons. The plant's original installed annual
chlorine production capacity of 31,700 tons has been increased to 64,000 tons.
The plant produces caustic soda and chlorine by electrolysis of sodium chloride
using mercury cells. The facility also has annual production of 78,000 tons of
sodium hypochlorite, 10,500 tons of hydrochloric acid and 1,300 tons of
hydrogen, each of which are feedstocks for second generation producers.
The
Alagoas Plants.
The Alagoas chemical complex was established in 1977
to increase industrial use of caustic soda and chlorine produced from salt
mined in the region by the Company. The Company's chlorine and caustic soda
plant in Alagoas commenced operations in February 1977, and its PVC plant in
Alagoas commenced operations in January 1989. Current annual effective
production capacity at the Alagoas plants is 204,000 tons of PVC. The Company's
PVC plant in Alagoas produces a full range of grades of suspension PVC and
annually produces 600,000 tons of ethylene dichloride, 460,000 tons of caustic soda
and 410,000 tons of chlorine. The PVC plant uses Mitsubishi technology, and
the caustic soda and chlorine plants use diaphragm electrolysis.
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The
São Paulo Plant.
The São Paulo plant was purchased in 1982 from the
first Brazilian manufacturer of PVC. The plant began operations in 1960 and
has an annual effective production capacity of 25,000 tons of PVC. It produces
small batches of special types of dispersion PVC, including emulsion and
micro-suspension PVC and copolymers. The technology for the production of
dispersion PVC was originally licensed by the Geon Company, but has since been
updated and improved by the Company.
Maintenance of Vinyls Unit Plants
The Company has a regular maintenance program for each of its vinyls
plants. The Camaçari and Alagoas PVC plants are generally shut down for 20
days every two years to allow for regular inspection and maintenance. The São
Paulo plant is generally shut down annually for five days of maintenance. The
Company's caustic soda and chlorine plants are generally shut down for 15 days
of maintenance every two years. This program of regularly scheduled
maintenance is standard in the petrochemical industry and does not materially
affect the Company's ability to produce and deliver its vinyls products on a
timely basis.
Center for Technology and Innovation
The Vinyls Unit maintains a center for technology and innovation in São
Paulo. This center employs five product engineers and five technicians
specializing in plastics and modern equipment that render support services to
customers, develop applications for PVC and train personnel of the Vinyls
Unit's customers. This center has developed new applications for PVC,
including vertical blinds, coatings for industrial PVC pipes, resins used in
automotive parts and in the manufacture of doors, windows and other building
components.
Raw Materials of the Vinyls Unit
Ethylene.
The most significant direct cost associated with the production
of PVC and ethylene dichloride is the cost of ethylene, which accounted in 2002
for approximately 58.7% of the Company's variable cost of PVC sales (60% in
2001) and 77.1% of ethylene dichloride sales (80% in 2001). Braskem's Basic
Petrochemical Unit supplies all of the ethylene required by the Vinyls Unit.
Ethylene is delivered to the Alagoas plant via a 477-kilometer pipeline that
the Company owns, and the São Paulo plant receives vinylchloride monomer by
ship from the plant in the Northeastern Complex. Because the cost of storing
and transporting ethylene and propylene is substantial and there is inadequate
infrastructure in Brazil to permit the importation of infrastructure for large
quantities of ethylene or propylene, the Company's Vinyls Unit is highly
dependent on ethylene that is supplied by the Basic Petrochemicals Unit. For a
description of the pricing of ethylene, see "—The Basic Petrochemicals
Unit—Sales and Marketing of Basic Petrochemical Products."
Electric
Power.
Electric power is a significant cost component in the
production of chlorine and caustic soda. In 2002, electric power accounted for
approximately 45% of the Vinyls Unit's cost of caustic soda sales and
approximately 18.8% of the Vinyls Unit's cost of sales (16% in 2001). In 2002,
the Company's Vinyls Unit used a total of approximately 1,707 GWh of
electricity (1,306 GWh in 2001).
The Vinyls Unit obtains some of its electric power requirements from the
Basic Petrochemicals Unit and purchases the remainder of its requirements from
various generators under power purchase agreements. The Vinyls Unit's caustic
soda plants at Camaçari and Alagoas and the PVC plant at Camaçari purchase
their electricity requirements from CHESF. CHESF and CEAL-Companhia Energética
de Alagoas S.A. distribute electricity to the PVC plant in Alagoas. The Vinyls
Unit's São Paulo plant obtains its electricity from Eletropaulo
Metropolitana-Eletricidade de São Paulo S.A. The underlying power purchase
agreements are long-term renewable contracts with automatic rolling three-year
extensions. The agreements provide Braskem with the option to purchase its
total electricity requirements, based on an annual estimate. The price terms
of the contracts are based upon tariffs regulated by
Agência Nacional de
Energia Elétrica
(the Brazilian federal energy regulatory agency, or ANEEL).
47
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36
Salt.
The Company used approximately 625,900 tons of salt in 2002 in its
production of chlorine and caustic soda. In 2002, salt accounted for 3.4% of
the Company's variable costs of caustic soda sales and approximately 1.1% of
the Vinyls Unit's total cost of sales. The Company pays a small monthly
royalty to the Brazilian government for exclusive salt exploration rights at a
salt mine located near the Alagoas plant. The Company estimates that the mine
has sufficient reserves of salt to last approximately 40 to 50 years at current
rates of production. The Company enjoys significant cost advantages when
compared to certain of its competitors due to low extraction costs of rock salt
(particularly as compared to sea salt), low transportation costs due to the
proximity of the salt mine to the Company's production facility and the higher
purity of rock salt as compared to sea salt.
Other
Utilities.
All of the Vinyls Unit's facilities in the Northeastern
Complex are supplied with other required basic utilities, including steam,
purified and demineralized water, compressed air and nitrogen by the Basic
Petrochemicals Unit. Basic utilities are supplied to the Alagoas PVC plant by
Trikem's subsidiary, Companhia Alagoas Industrial — Cinal ("Cinal"), which is
owned by the companies operating in the Alagoas complex, including the Company.
Basic utilities not supplied to the Company's Alagoas PVC plant by Cinal, such
as compressed air and nitrogen, are supplied by the Company itself. The
Alagoas chlorine and caustic soda plants supply their own utilities
requirements. The São Paulo plant supplies its own utility requirements.
Sales and Marketing of Vinyls Products
The following table sets forth, for the years ended December 31, 2002 and
2001, certain information regarding Trikem's net sales.
Year ended December 31,
2002
2001
Quantities
Quantities
sold
Net Sales
sold
Net Sales
(millions
(millions
(thousands
of U.S.
(thousands
of U.S.
of tons)
dollars)
(%)
of tons)
dollars)
(%)
Domestic Sales
PVC suspension
332.5
225.4
55.8
309.3
221.6
51.7
PVC emulsion
17.6
16.4
4.1
18.2
18.9
4.4
Caustic soda
400.9
76.5
18.9
358.7
132.3
30.9
Others (1)
122.4
26.1
6.5
137.2
14.5
3.4
Total domestic sales
873.4
344.4
85.3
823.4
387.3
90.4
Exports
—
59.5
14.7
—
41.3
9.6
Total vinyls net sales
—
403.9
100
—
428.6
100.0
(1)
Other products include caustic soda
flakes, chlorine, sodium hypochlorite, and
chloridric acid, among others.
The Company's Vinyls Unit sells PVC, caustic soda, chlorine, ethylene
dichloride and other products to a concentrated customer base located
principally in southern and southeastern Brazil, which sales accounted for
16.2% and 16% of the Company's combined net sales revenue for 2002 and 2001,
respectively. The Vinyls Unit's principal domestic sales and marketing group
is located in the city of São Paulo, which enables it to best serve the largest
part of its domestic customer base. The Company's customers generally are
third generation companies that produce a wide variety of plastic-based
consumer and industrial goods.
Most domestic sales of PVC and caustic soda are made directly to
customers, without the use of third-party distributors.
The Vinyls Unit maintains contractual relationships with three
distribution centers located in Paulínea and Itapevi, both in the State of São
Paulo, and Joinville in the State of Santa Catarina. These distribution centers
provide the Vinyls Unit with logistical support. In addition, the Company
operates three warehouse facilities for PVC and six terminal tank facilities for caustic soda strategically located along
the Brazilian coast to enable the Company to deliver its products to its
customers on a "just-in-time" basis.
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37
The Company's Vinyls Unit develops its
business through close collaboration with its customers, working together with
them to improve existing products as well as to develop new applications for
PVC. For these purposes, as well as to assist its customers in their research
and development projects, the Company operates a center for technology and
innovation at its São Paulo plant. The Company's marketing and technical
assistance groups also advise customers and potential customers that are
considering the installation of manufacturing equipment for PVC end-products.
The Company determines the domestic prices for its PVC resins with
reference principally to the prices paid by third generation producers for
imports of PVC plus estimated service charges. The Company's export price for
PVC is generally equal to the international market price but also takes freight
costs into account. In addition to price, significant factors in the marketing
of PVC resins are delivery, quality and technical service. The Company
establishes its domestic price for caustic soda based upon the international
market price and domestic market prices charged by its three domestic
competitors, taking into account any import duties and freight costs.
Approximately 65% of the Company's caustic soda sales are effected pursuant to
agreements that are generally for terms of one to three year terms and may
include floor and ceiling prices. As with PVC, the Company's export prices for
caustic soda and ethylene dichloride are generally determined according to
international market prices, but also take import duties and freight costs into
account.
Prices obtained by the Company in the Brazilian market traditionally are
higher than the prices obtained for its exports. The difference in prices
between the Brazilian and export markets results from:
•
transportation costs;
•
tariffs, duties and other trade barriers;
•
a premium reflecting the tighter demand/supply relationship in Brazil; and
•
the reliability of supply and technical support that the Company provides.
In 2002, the Vinyls Unit had export net sales of U.S.$59.5 million, which
accounted for 14.7% of the Vinyls Unit net sales. In 2002, 50.7% of export net
sales were of PVC, and 49.3% were of ethylene dichloride. The Company does not
export chlorine and did not export caustic soda in 2002. The Company's vinyls
export sales vary from year to year, influenced principally by domestic market
conditions. The Company has a continuing export obligation related to an
export prepayment facility backed by its export receivables generated under a
supply agreement with Nissho Iwai of Japan (the "Nissho Iwai Supply
Agreement"). Exports under the Nissho Iwai Supply Agreement accounted for 52%
and 84% of the Company's export net sales of PVC and ethylene dichloride,
respectively, during 2002 (37% and 90% during 2001). Under this supply
agreement, the Company has agreed to supply, and Nissho Iwai has agreed to
purchase, minimum annual volumes of PVC and ethylene dichloride ranging between
21,000 and 24,000 tons of PVC and between 100,000 and 160,000 tons of ethylene
dichloride. Any PVC, ethylene dichloride or caustic soda made available by the
Vinyls Unit for export in excess of these contractual minimums must first be
offered to Nissho Iwai. The Company's supply agreement with Nissho Iwai
expires on April 30, 2004.
The Company uses a variety of methods of distribution for its exports,
depending on the size of the market in question, including direct sales,
independent distributors, negotiations conducted through trading companies and
sales in the spot market.
The Company focuses its export sales of PVC principally on the Mercosul
and Southeast Asian markets and to a lesser extent on the United States and
Europe. The Company also sells directly, as well as through local
distributors, to over 20 clients in Mercosul countries. In Asia, the Company
distributes its vinyls products exclusively through Nissho Iwai. The remaining
PVC is sold through third party distributors and on the spot market.
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Table of Contents
Competition
Polyvinylchloride.
The Company and Solvay are the only two producers of
PVC in Brazil. Solvay's total Brazilian installed annual production capacity
is estimated to be 250,000 tons as compared to the Company's annual production
capacity of 475,000 tons. Solvay's two production facilities are located in
São Paulo and therefore are closer in proximity than the Company's facilities
to the primary PVC market in Brazil. However, the Company believes that its
internal ethylene, ethylene dichloride and vinylchloride monomer production
capabilities, its modern suspension plants, its strong customer service and its
technical assistance programs enable the Company to compete effectively with
Solvay.
The Company also competes with importers of PVC. Approximately 20% of
Brazil's total PVC consumption in 2002 was imported (21% in 2001).
Domestically produced PVC is currently competitively priced with imported PVC
after taking into account transportation costs and import duties. In the rest
of South America, the Company's principal competitor in the PVC market is also
Solvay, which has one plant in Argentina.
The Company also competes with other producers of thermoplastics that
manufacture the same line of vinyls products or products that compete with the
Company's vinyls product line. Thermoplastics principally consist of
polyethylene and polypropylene, and are used in certain applications as
substitutes for PVC. Wood, glass and metals also are used in some cases as
substitutes for PVC.
Other
Products.
The four largest Brazilian producers of caustic soda
account for approximately 92% of Brazilian production. The Company's
production share of caustic soda was approximately 38% in 2002 and 2001. The
Company and Dow Chemical operate in this market throughout Brazil, while the
other domestic producers of caustic soda generally operate on a local or
regional basis. In 2002, approximately 30% (25% in 2001) of Brazil's total
caustic soda consumption was imported. The Company believes that imports of
caustic soda will not increase substantially because of the high cost of
transporting caustic soda, which is usually sold in suspension form. In the
caustic soda market, the Company competes mainly on the basis of price and
timeliness of delivery.
In the rest of South America, the Company's principal competitors in the
caustic soda market are Dow Chemical, Solvay and producers located on the U.S.
Gulf Coast.
Only one other Brazilian company produces ethylene dichloride for third
parties. In
the ethylene dichloride market, the Company competes mainly on the basis of
price and timeliness of delivery.
The Business Development Unit
The Company's Business Development Unit is comprised principally of the
operations conducted by Proppet and Nitrocarbono prior to their mergers with
the Company. Prior to the 52114 Merger on August 16, 2002, the only operations
of the Business Development Unit were those formerly conducted by Proppet.
Prior to the Nova Camaçari Acquisition on July 25, 2001, the Company's Business
Development Unit did not conduct any operations. The results of Proppet are
included in the Consolidated Financial Statements for the periods after July
25, 2001, the date of the Nova Camaçari Acquisition. The results of
Nitrocarbono are included in the Consolidated Financial Statements for the
periods after August 16, 2002, the date of the 52114 Merger. See "History and
Development of the Company" and "Item 5. Operating and Financial Review and
Prospects—The Auction, the Nova Camaçari Acquisition and the Related Party
Mergers." Historical financial information with respect to the Polyolefins
Unit is set forth in Note 18 to the Consolidated Financial Statements. The
financial information with respect to the Business Development Unit contained
in this section is derived from the financial records of Nitrocarbono for the
period September to December 2002 and financial records of the Company with
respect to its PET business. This financial information and may not be
indicative of the results that the Company's Business Development Unit will
achieve in the future.
50
Table of Contents
The Company's Business Development Unit's operations are conducted at two
plants located in the Northeastern Complex. One plant produces PET resin and
DMT, and the other plant produces intermediary products including caprolactam,
cyclohexane, cyclohexanone and ammonium sulfate. In addition, the Business
Development Unit manages certain of the Company's minority equity investments,
principally its investments in Petroflex and Cetrel, and manages its business
development ventures in the energy and environmental areas. Approximately 66%
and 34% of the Business Development Unit's net sales in 2002 were derived from
the sale of PET and of caprolactam, respectively.
Products of the Business Development Unit
The following chart shows the major products produced by the Business
Development Unit of the Company and their typical end uses.
Products
Typical end uses
PET
Packaging for soft drinks, medications and textile fibers
DMT
Used to produce PET and to insulate cables.
Caprolactam
Textile thread (Nylon-6)
Ammonium sulfate
Fertilizer
Cyclohexanone
Paint solvent, pesticides, natural resins, oils and rubber
Cyclohexane
Paint solvent, pesticides, natural resins, oils and rubber
The production of PET involves two main steps: (1) transesterification of
DMT in the presence of ethylene glycol, generating dihydroxiethyl-terephthalate
("DHET") and methanol, which is sent to the DMT plant; and (2) polycondensation
of DHET, which involves the addition of additives and catalysts to accelerate
the polycondensation process. The finished polymer produced by
polycondensation is extruded into strands, which are immersed in water,
transported and fed into a pelletizer. Amorphous chips are fed to the
solid-state polymerization unit to produce bottle-grade polyester chips. The
solid state polymerization process involves hot dedusting and crystallization
to reach the desired intrinsic viscosity for bottle grade application. The hot
PET is discharged from the reactor to the fluidized bed cooler and deduster to
be stored.
The production of caprolactam involves four main steps: (1) production of
cyclohexane through benzene hydrogenation; (2) production of cyclohexanone
through oxidation of cyclohexane; (3) oxidation of cyclohexanone; and (4)
preparation, purification and flaking of caprolactam. Ammonium sulfate is
produced as a by-product. The production of cyclohexanone-oxime involves the
preparation of hydroxylamine phosphate through the reduction of nitrate with
hydrogen.
The production of ammonium sulfate involves the concentration through
evaporation of the ammonium sulfate solution from 40% to 48%. The ammonium
sulfate solution is a by-product of the caprolactam plant. The solution at 48%
feeds a second evaporation unit to obtain a super saturated solution, which
feeds a crystallizer to form ammonium sulfate crystals.
Production Facilities of Business Development Unit Plants
The Business Development Unit operates two plants, which are owned by the
Company. At December 31, 2002, the Business Development Unit's plants had a
total annual effective capacity to produce 65,000 tons of PET and 62,000 tons
of caprolactam.
The table below sets forth the location, main products, production
capacity and tons produced for the years presented for each of the plants
currently in the Company's Business Development Unit.
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Table of Contents
Production (in tons)
Year Ended December 31,
Production
Location (Complex)
Main Products
Capacity
2002
2001
Camaçari (Northeastern)
PET
65,000
59,031
56,517
DMT
80,000
76,899
70,378
Camaçari (Northeastern)
CPL
62,000
57,522
48,221
Cyclohenane
72,000
69,144
63,410
Cyclehexanone
55,000
52,942
46,900
Ammonium sulfate
114,000
108,052
94,151
The Company's PET and DMT are produced at one plant located at the
Northeastern Complex that commenced operations in 1999 with an annual installed
capacity of 65,000 tons of PET and 80,000 tons of DMT. The first plant uses
Dupont-Sinco technology for the production of PET and Dynamit Nobel technology
for the production of DMT. The Company's caprolactam, cyclohexane,
cyclohexanone and ammonium sulfate are produced at another Business Development
Unit plant located at the Northeastern Complex. This plant commenced
operations in 1977 and uses DSM-Stamicarbon technologies in the production of
each of these products.
In addition, the Business Development Unit maintains high-tech research
and development laboratories, which laboratories are staffed with highly
qualified personnel that are trained to assist Braskem's customers in
identifying ways to develop or improve their production processes or final
products. The Business Development Unit also works in partnership with top
research centers and universities to develop higher-value added products.
Maintenance of Business Development Unit Plants
As with the plants of the Basic Petrochemicals Unit, the plants of the
Business Development Unit are maintained in part by CEMAN. See "– Basic
Petrochemicals Unit – Maintenance of Basic Petrochemicals Unit Plants."
Regular plant maintenance usually requires plant shutdowns every two years
and takes approximately 20 days to complete. The last general maintenance
shutdown of the caprolactam plant was carried out in April 2003 and lasted 20
days. The cost was approximately U.S.$2.0 million. The last general
maintenance shutdown of the Business Development Unit's DMT and PET plant was
carried out in June 2003. The cost of this maintenance was approximately
U.S.$2.0 million.
Raw Materials of the Business Development Unit
The most significant direct cost associated with the production of
caprolactam is the cost of benzene, which accounted for approximately 46% of
the Business Development Unit's variable production costs during 2002. All of
the benzene consumed in the production of caprolactam is supplied by the Basic
Petrochemicals Unit.
The most significant direct cost associated with the production of PET is
the cost of para-xylene, which accounted for approximately 47% of the Business
Development Unit's variable production costs during 2002 (12% for 2001). All
of the para-xylene consumed in the production of PET is supplied by the Basic
Petrochemicals Unit.
Sales and Marketing of Business Development Unit Products
The following table sets forth, for the years ended December 31, 2002, and
2001, certain information regarding sales by the Company's Business Development
Unit for the years indicated.
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Table of Contents
Year ended December 31,
2002
2001
Quantities
Quantities
sold
Net Sales
sold
Net Sales
(thousands of
(millions of
(thousands
(millions of
tons)
U.S. dollars)
(%)
of tons)
U.S. dollars)
(%)
Domestic Sales
DMT
13.8
6.8
7.4
10.9
6.2
9.7
PET
59.8
54.3
58.7
53.0
57.7
90.3
Caprolactam
46.1
20.1
21.7
0.0
0.0
0.0
Ammonium sulfate
112.0
3.2
3.4
93.8
0.0
0.0
Cyclohexane
6.8
1.4
1.5
8.2
0.0
0.0
Cyclohexanone
2.3
0.7
0.8
0.0
0.0
0.0
Total domestic sales
240.8
86.5
93.5
165.9
63.9
100.0
Exports
—
6.0
6.5
—
0.0
0.0
Total net sales
—
92.5
100.0
165.9
63.9
100.0
The Business Development Unit sells its products to a highly concentrated
customer base. Five customers accounted for 80% of PET sales during
2002, and 10 customers accounted for 90% of PET sales during the same year. The Business
Development Unit's caprolactam customer base is even more concentrated. Two
customers accounted for 66% of its sales during 2002.
During 2002, consumption of PET in Brazil for mineral water, tea and fruit
juice bottling increased by 20% and was particularly strong in the soft drink
market. In addition, consumption of PET for packaging of cosmetics and other
beauty products increased substantially during 2002. Similarly, the use of PET
for packaging of cleaning products increased during 2002, as the three
principal competitors in this market (Bombril, Química Amparo and Minuano)
continued to use PET for producing packaging for liquid detergents.
The Business Development Unit is focused on maintaining a strong and close
relationship with its customers, and offers technical support, services and
other programs to its customers in order to provide them with the benefit of
the most recent technological developments. The Business Development Unit also
identifies new business opportunities for Braskem through research and market
analysis in order to enhance product demand.
Equity Interests
The Business Development Unit also manages certain of the Company's
minority equity investments, including its investments in Petroflex and Cetrel.
Petroflex.
At December 31, 2002, the Company owned 20.1% of the total and
voting capital stock of Petroflex, a producer of synthetic rubber. The Company
obtained the following information with respect to Petroflex, which is publicly
traded on the BOVESPA, from publicly available materials. The Company has
relied on the accuracy and completeness of such information for purposes of the
following description of Petroflex but is not responsible in any manner
whatsoever for any such information and has no liability therefor.
Petroflex is the leading producer of synthetic rubber in Latin America and
produces approximately 370 thousand tons of more than 50 types of elastomers
per year. Petroflex operates three plants located in: Duque de Caxias, Rio de
Janeiro; Cabo, Pernambuco; and Triunfo, Rio Grande do Sul. It sells its
products to clients in approximately 60 countries throughout the world.
Petroflex purchases butadiene from the Company from which it produces
styrene-butadiene, polybutadiene, liquid hidroxylated polybutadiene and other
elastomers.
Petroflex was formed in 1976 with Petroquisa as its majority shareholder.
In 1992, as part of the Brazilian government's efforts to privatize the
Brazilian petrochemical industry, Petroquisa auctioned a portion of its
interest in Petroflex to private investors. At December 31, 2002, each of the
Company and Suzano Química Ltda. owned 20.1% of the voting and total capital stock of Petroflex, Resitec Indústria
Química Ltda. owned 12.8% of Petroflex's voting stock, and Unipar – União de
Indústrias Petroquímicas S.A. owned 10.1% of Petroflex's voting capital stock.
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The major raw materials used in Petroflex's production process are
butadiene and styrene. Petroflex purchases part of its raw materials
requirements from the Company. Due to high naphtha prices in 2002, the prices
of butadiene and styrene increased by 51% and 71%, respectively, in the
international market. However, the recovery of rubber prices in
reais
, due to
increases in international prices and the devaluation of the
real
against the
U.S. dollar, allowed Petroflex to pass on these increased costs to its
customers.
The main customers of Petroflex are manufacturers of tires, shoes,
adhesives and sealants.
In 1993, the three industrial plants operated by Petroflex were awarded
ISO 9002 certification. In 1996, Petroflex was awarded ISO 14001 certification
for environmental quality, and in 1999, Petroflex was awarded BS 8800
certification for occupational health and safety.
Cetrel.
At December 31, 2002, the Company owned 21.1% of the total and
voting capital stock of Cetrel, which provides treatment services for the
wastewater and organic residues generated by the Company in the Northeastern
Complex. The Company obtained the following information with respect to
Cetrel, which is a private company, from publicly available materials. The
Company has relied on the accuracy and completeness of such information for
purposes of the following description of Cetrel but is not responsible in any
manner whatsoever for any such information and has no liability therefor.
Cetrel was formed in 1978 as the company responsible for the treatment and
disposal of effluents and industrial residue, as well as for environmental
monitoring of the entire Northeastern Complex. Cetrel has since expanded its
activities to include disposal of solid hazardous waste in special industrial
landfills, incineration of organo-chloric liquid residues and solid hazardous
waste, and environmental monitoring of the air, underground water, soil,
rivers, sea and fauna in and around the Northeastern Complex. Cetrel also
provides environmental engineering services for companies located throughout
Brazil.
Cetrel's main customers are the petrochemical producers in the
Northeastern Complex. Cetrel has entered into strategic alliances with DHV (in
respect of recycling and reuse of water), Lakes Environmental Softwares, Inc.
(in respect of management of residues through the use of specialized software)
and Bolland (in respect of incineration of residues with a low chlorine
content).
Competition
Braskem is the only manufacturer of caprolactam in the Mercosul market.
Imports of caprolactam represented only 8% of domestic consumption in 2002.
Although there is a caprolactam plant in Colombia that is focused on the
fertilizers market, it does not pose a significant competitive threat to the
Company.
There are two producers of PET in Brazil – the Company and Rhodia. Rhodia's total annual installed production capacity is
estimated at 290,000 tons, as compared to the Company's annual
production capacity of 65,000 tons. The Company also competes with importers
of PET. Approximately 35% of Brazil's total PET consumption in 2002 was
imported (38% in 2001). Although international producers of PET have greater
economies of scales than the Company, the Company is able to compete with these
producers due to the high transportation costs and import duties applicable to
PET imports. The Company's PET production is aimed at the bottled water
segment of the PET market.
Other Equity Investments
Copesul
. At December 31, 2002, the Company owned 29.5% of the capital
stock of Copesul, the cracker based in the Southern Complex, as a result of the
OPP Produtos Merger. The Company accounts for its interest in Copesul using
the equity method of accounting as an unconsolidated investment in the
Consolidated Financial Statements.
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The Company has obtained the following information with respect to Copesul,
which is publicly traded on the BOVESPA, from publicly available materials.
The Company has relied on the accuracy and completeness of such information for
purposes of the following description of Copesul but is not responsible in any
manner whatsoever for any such information and has no liability therefor.
Copesul is the second largest petrochemical cracker in Brazil based on
production capacity and produces approximately 40% of the national supply of
ethylene. It provides petrochemical feedstocks to second generation producers
located in the Southern Complex, including certain of the Polyolefins Unit's
plants. Copesul's manufacturing facility transforms naphtha into basic
petrochemicals, including olefins, such as ethylene, propylene (both polymer
grade and chemical grade) and butadiene, as well as aromatics, such as benzene,
toluene and xylene. These petrochemical products serve as the raw materials
processed by the second generation companies located in the Southern Complex to
produce intermediate petrochemicals including polyethylene, polypropylene and
other resins.
Copesul's ethylene annual production capacity is 1,135,000 tons per year,
and its annual propylene production capacity is approximately 567,000. In
2002, Copesul produced 1,017,000 tons of ethylene and 515,000 tons of
propylene.
Copesul was formed in 1976 with Petroquisa as its majority shareholder and
commenced operations in 1982. In May 1992, as part of the Brazilian
government's efforts to privatize the Brazilian petrochemical industry,
Petroquisa auctioned a portion of its interest in Copesul to private investors.
At December 31, 2002, a consortium, including the Odebrecht Group and
Ipiranga, owned approximately 58.9% of the capital stock of Copesul, and
Petroquisa owned 15.6% of the capital stock of Copesul.
The principal raw material used in Copesul's production process is
naphtha, which is currently supplied by Petrobras to Copesul principally
through an underground pipeline connected to the Southern Complex. Although
the price of naphtha increased in 2002, Copesul's gross margin increased from
14.6% in 2001 to 19.1% in 2002. For a discussion of the impact of naphtha
prices on the petrochemical sector in Brazil, see "—The Brazilian Petrochemical
Industry - Role of the Brazilian Government -
Role of Petrobras
."
The main customers of Copesul are the second generation companies located
in the Southern Complex. Copesul has long-term supply contracts with its major
customers, including the Company's Polyolefins Unit. The prices for Copesul's
products are determined in accordance with a cost margin sharing method. See
"—The Basic Petrochemicals Unit—Sales and Marketing of the Basic Petrochemical
Unit."
In 2002, net sales and net income were U.S.$967.3 million and U.S.$55.5 million, respectively.
Copesul is subject to the same federal, state and local environmental laws
and regulations applicable to the Company's operations at the Southern Complex.
Pursuant to federal, state, and local environmental laws and regulations,
Copesul is required to obtain operating permits for its facilities.
Fundação
Estadual de Proteção Ambiental
, the Rio Grande do Sul State environmental
authority, regulates Copesul's operations by prescribing specific environmental
standards for Copesul in its operating permit, which is renewed annually. In
addition, an on-site governmental officer monitors environmental compliance at
Copesul's facility.
Since December 1999, Copesul has been NBR-ISO 9001, 9002 and 14001
certified. Copesul is also a member of the "Responsible Care" program. The
program's objective is to combine economic development with the best practices
of environmental protection, occupational health and industrial safety.
Politeno.
At December 31, 2002, the Company owned 35% of the voting
capital stock, representing 31% of the total capital stock, of Politeno, a
second-generation company operating in the Northeastern Complex. The
Company accounts for its interest in Politeno using the equity method of
accounting as an unconsolidated investment in the Consolidated Financial
Statements. The Company has obtained the following information with respect to
Politeno, which is publicly traded on the BOVESPA, from publicly available
materials. The Company has relied on the accuracy and completeness of such
information for purposes of the following description of Politeno but is not
responsible in any manner whatsoever for any such information and has no
liability therefor.
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Politeno is the second largest second generation petrochemical company in
Latin America, producing thermoplastic resins – polyethylenes – widely used in
the flexible and rigid packaging industries. Politeno produces low, medium and
high density polyethylene, linear low density polyethylene, linear medium
density polyethylene, ethyl vinyl acetate copolymer – EVA, and other special
resins.
The production facility of Politeno is comprised of two industrial plants,
an LDPE facility and an LPE facility. The LDPE facility is the conventional
low-polyethylene and EVA production facility, with a production capacity of
150,000 tons per year. The LPE facility produces linear polyethylene and has
an annual production capacity of 210,000 tons.
The principal raw materials used in Politeno's production process are
ethylene and propylene, which are primarily supplied by Braskem. Politeno also
uses butadiene, benzene, toluene and xylene.
Politeno's principal customers are third generation producers.
Politeno is subject to the same federal, state and local environmental
laws and regulations applicable to the Company's operations at the Northeastern
Complex. Pursuant to federal, state and local environmental laws and
regulations, Politeno is required to obtain operating permits for its
facilities. The Bahia State environmental authority regulates Politeno's
operations by prescribing specific environmental standards for Politeno in its
operating permit, which is renewed annually. In addition, an on-site
governmental inspector monitors environmental compliance at Politeno's
facility.
Quality Control
Braskem's quality management uses the following norms and regulations as its base:
•
ISO 9001/00 and 14,000;
•
OHSAS 18,000;
•
OSHA; and
•
"Responsible Care" as implemented by the American Chemistry Council.
The Company has instituted systematic improvement processes in its
operational areas, with focus on integration of production, maintenance,
inventory management, client satisfaction and profitability.
ISO Certifications
The Company's extensive quality control procedures have enabled it to
obtain ISO 9002 certifications, an internationally recognized quality control
standard, for the following products:
benzene
butadiene 1, 2
butadiene 1, 3
butene-1
caprolactam
chemical grade propilenem
coperaf-1
cyclohexane
cyclohexanone
D1-hydrogenated CP
DCPD
dimethyl terephthalate (DMT)
ethylene
hydrogen
isoprene
methane
mixed xylenes
MTBE
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ortho-xylene
para-xylene
PGH Stream
piperlyne
polyethylene terephthalate (PET)
polymer grade propylene
Solvent C9
toluene
Utilities
The Company also has obtained ISO 14001 certifications for the following products:
caustic soda
chlorine
ethylene dichloride
flake caustic soda
high density polyethylene
hydrochloric acid
hydrogen
linear low density polyethylene
liquid caustic soda (rayon grade)
polypropylene
propylene/ethylene copolymers
PVC
sodium hypochlorite
These certifications take into account both the quality of the final
product and the quality of operating procedures. The Company is currently
seeking ISO 14002 certification in respect of the environmental management
systems implemented at its Basic Petrochemicals plants.
Insurance
As of December 31, 2002, the Company's plants were insured against
material damages and consequent business interruption through "All Risks"
policies in an aggregate amount equal to approximately U.S.$3.7 billion
(combined material damages and business interruption coverage, subject to
deductibles). Approximately 87% of the Company's insurance coverage is written
in the London insurance market. The Company's remaining insurance coverage is
written in the Brazilian insurance market. The Company's "All Risks" policies
are in force until November 30, 2003 and are renewed annually.
The material damages coverage provides insurance for losses due to
material damages such as fire and machinery breakdown. This coverage has a
maximum indemnification limit of U.S.$1.5 billion and has a deductible of
U.S.$5.0 million. The business interruption coverage provides insurance for
interruptions resulting from stoppages due to any material damage covered by
the policy. This coverage insures against losses of up to U.S.$309.8 million
due to stoppages extending beyond 60 days. The losses are covered until the
plant and production are re-established, with a maximum indemnity period
ranging from 12 to 24 months.
The Company also has a "third party liability" policy, which covers losses
for damages caused to third parties by the Company's operations, including
sudden environmental pollution, up to a limit of U.S.$60.0 million per loss or
occurrence.
In addition to these policies, the Company has other insurance policies
for specific situations, like directors and officers (D&O) liability, marine
and transport insurance, vehicle insurance and other kinds of coverages that
are not included in the "All Risks" policies.
The Company does not anticipate having any difficulties in renewing any of
its insurance policies and believes that its insurance coverage is reasonable
in amount and consistent with industry standards in Brazil.
Property, Plant and Equipment
The property, plant and equipment of the Company consist primarily of
petrochemical production facilities in Camaçari, State of Bahia, in Triunfo,
State of Rio Grande do Sul, in São Paulo, State of São Paulo and in Maceió and
Marechal Deodoro, State of Alagoas, Brazil. The Company also has equity
interests in companies located in other parts of the country as well as an
administrative support office in Rio de Janeiro, State of Rio de Janeiro,
Brazil. In addition, the Company maintains its corporate headquarters in São
Paulo.
The following table sets forth the properties of the Company and its main
affiliates by location of facilities and type of business.
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Table of Contents
Name of Company
Type of Business
Location of Facilities
Braskem
(1)
Petrochemical and Utilities
Producer
Camaçari, Triunfo, Capuava,
Itatiba, Marechal Deodoro and
Vila Prudente
Copene Monômeros
Petrochemical
Camaçari
Petroflex
Producer
Duque de Caxias
Tegal
Petrochemical Products Storage
Candeias
Cetrel
Industrial Residues Treatment
Camaçari
Codeverde
Land Development
Irecê
Norcell
Forestry Management
Alagoinhas
(1)
Includes Trikem, Polialden, Nitrocarbono, Copene, Proppet and OPP
Química.
The Company believes that all of its facilities are in good condition and
are used according to their intended purposes. The Company leases its
headquarters in São Paulo and certain other assets that are not material to its
operations. For a description of the capacity of each of the Company's
industrial facilities, see "—Business Overview."
As of December 31, 2002, the consolidated net book value of the Company's
property, plant and equipment was U.S.$1,183.7 million.
Certain real estate located in the Northeastern Complex (including the DMT
and PET plants and all of the equipment located in these plants) and two of the
Company's polyolefins plants in the Southern Complex are subject to liens (in
the form of mortgages or pledges) that guarantee certain of the Company's
financial transactions intended to generate working capital and funds for
capital investments.
Environmental Matters
The Company is subject to Brazilian federal, state and local laws and
regulations governing the discharge of effluents and emissions into the
environment and the handling and disposal of industrial waste or otherwise
relating to the protection of the environment. The Company has obtained all
environmental and other licenses and permits that are required in connection
with the operation of its plants, and all such licenses and permits are
current. The Company believes that its operations are, and will continue to
be, in compliance in all material respects with applicable environmental laws
and regulations currently in effect.
Under federal and state environmental laws and regulations, the Company is
required to obtain operating permits for its manufacturing facilities.
Authorities in the State of Rio Grande do Sul, where the Southern Complex is
located, regulate the Company's operations by prescribing specific
environmental standards in the Company's operating permits, which must be
renewed annually. State authorities in the State of Bahia issued operating
permits for the Company's plants in the Northeastern Complex in 2000, which
must be renewed every five years. State authorities in the States of Alagoas
and São Paulo have issued permits for the Company's plants in those respective
complexes, which must be renewed every four years. Environmental standards for
the Company's plants located in the States of Bahia, Alagoas, Rio Grande do Sul
and São Paulo are prescribed and updated by regulation.
All projects for the installation and operation of industrial facilities
in the Northeastern Complex are subject to approval by the Council for
Environmental Protection of the State of Bahia ("CEPRAM"). CEPRAM's technical
office, the Environmental Resources Center ("CRA"), conducts an analysis of
each project and enforces the State of Bahia's laws on environmental
protection. The State's Research and Development Center and other outside
consultants act as technical advisors to the CRA. CEPRAM must approve
installed projects to commence operations and must renew its consent every five
years thereafter. The Company's environmental license was renewed by CEPRAM in
2000 and is valid until 2005. The Company's operating permit obligates it to
engage in systematic measures for the treatment of wastewater and hazardous
solid waste.
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In 2000, CEPRAM issued an authorization for the construction of new
pipelines between the Port of Aratu and the Company's plant for the
transportation of raw materials. This project contemplates the prevention and
control of environmental risks through the adoption of measures to prevent and
detect leaks and spillages, as well as their timely detection.
The Brazilian government recently enacted an Environmental Crimes Law that
imposes criminal penalties on corporations and individuals causing
environmental damage. Corporations found to be polluting can be fined up to
U.S.$50 million, have their operations suspended, be barred from entering into
certain types of government contracts, be required to repair damage they cause,
and lose tax benefits and incentives. Individuals (including corporate
officers and directors) may be imprisoned for up to five years for
environmental violations.
The Company has obtained all environmental and other licenses and permits
that are required in connection with the operation of its plants, and all such
licenses and permits are up to date.
In September 2002, the Company created a Health, Safety and Environment
Committee, composed of leaders of each of the Company's business units and of
the Company's management. This Committee supports and monitors the Company's
environmental, health and safety efforts. In February 2003, the Company's
Board of Directors approved the Company's health, safety and environment
policy.
The Company treats wastewater at Cetrel, a liquid effluents treatment
station collectively owned by all of the companies in the Northeastern Complex,
including the Company, and the State of Bahia. The treatment station also
includes a system for the collection and disposal of wastewater contaminated
with inorganic waste.
In addition, the Company has a contract with Cetrel for the storage and
incineration, treatment and disposal of hazardous solid waste. For other kinds
of solid waste, Cetrel maintains a landfill. The Company also has a contract
with Holdercim Brasil S.A., a company that is part of a Holdersbank, a Swiss
group, to co-process hazardous solid waste in a cement kiln located in the city
of Pedro Leopoldo, State of Minas Gerais.
In January 1996, Cetrel obtained its BS 7750 certification (British
Standard), and in September 1996 became one of the first companies in the world
to receive the ISO 14001 certification, an international standard for
environmental control. In 1998, Cetrel obtained certification of its
laboratory by the ISO Guide 25 standards system from the Brazilian Institute of
Metrology and Industrial Quality ("Inmetro").
In 2000, the Company adopted the Clean Technologies Program, carried out
in partnership with the Polytechnical School of the Federal University of
Bahia, the State of Bahia Industrial Federation and the Environmental Resources
Center. This program contributes to the development of actions for the
application of clean technologies in industry, such as post-graduate courses in
environmental technologies and the establishment of the regional nucleus for
clean production, a project coordinated by the Brazilian Business Council for
Sustained Development – CEBDS. Braskem is also a signatory to the Charter of
Sustainable Development of the International Chamber of Commerce.
The Company also signed an agreement for the formulation and
implementation of a system for the prevention of global warming through reduced
atmospheric emissions of pollutants in Brazil, in partnership with Petrobras,
Companhia Vale do Rio Doce and the CEBDS. The Company reduced the atmospheric
emissions of pollutants, including sulphur dioxide and particulate matter,
generated by the Basic Petrochemicals Unit during 2002, as a result of the
better quality fuel that the Company burned in its manufacturing process.
Although the Company's environmental compliance costs have not been
substantial to date, these costs may increase as a result of the projected
increase in its production capacity. In addition, it is possible that as a
result of future regulatory and other developments, the amount and timing of
future expenditures required to remain in compliance with environmental
regulations could increase substantially from their current levels.
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Safety
The Company participates in the "Responsible Care" program, which
establishes international standards for environmental, occupational health and
safety practices for chemical manufacturers. Participants in this program adopt
policies and procedures that require them to follow detailed instructions in
matters of health, safety and the environment. The Company seeks to maintain
these environmental standards and has qualified its plants for NBR-ISO 9001,
9002 and 14001 certification, which includes internationally prescribed
environmental management practices. The Company is currently seeking NBR-ISO
18000 certification for environmental, health and safety compliance for all of
its plants.
The Company has adopted practices that it believes are consistent with the
best international practices relating to health, safety and the environment.
As a result of its implementation of these practices, the Company has
successfully decreased the aggregate number of workplace accidents involving
its employees and third party service providers working at its facilities. The
following table illustrates the Company's progress in terms of its safety
record:
For the Year Ended
December 31,
Safety Indicator
2002
2001
2001 (1)
Index of Accident Frequency (accidents/200,000 man-hours)
1.1
1.3
3.9
Index of Severity (lost and deducted days/200,000 man-hours)
17.0
21.0
71.0
(1)
ABIQUIM average for 2001
As shown in the above table, the Company's safety record ranks above
average for companies in the Brazilian chemical industry. The Company's safety
policy makes all officers, directors and employees responsible for the safety
of its workers, which has increased levels of awareness throughout the Company.
The Company's safety improvements in 2002 include:
•
no significant environmental accidents in 2002;
•
a 41% reduction in the Company's rate of accidents causing injuries
requiring a worker to be absent from work, and a 19% reduction in the
Company's rate of severe accidents, compared to 2001;
•
the Company's caprolactam plant in the Northeastern Complex
surpassed three million work-hours without accidents causing injuries
requiring any of the Company's workers to be absent from work (a total
of 355 days);
•
the Company's caustic soda plant in the Northeastern Complex
achieved 1,740 days without accidents causing injuries that required
any of the Company's workers to be absent from work; and
•
during the annual scheduled maintenance period, the Company's PVC
plant in Marechal Deodoro, the Company's caustic soda plant in Maceió,
the Company's PVC plant in the Northeastern Complex and the Company's
caprolactam plant in the Northeastern Complex were completely free of
employee accidents.
The Northeastern Complex is equipped with a fire-fighting safety system.
A 200,000 cubic meter artificial lake, connected to the companies in the
Northeastern Complex by a pumping station and a distribution network and built
in accordance with international safety standards, provides water for
firefighting. Each company in the Northeastern Complex, including the Company,
has emergency equipment and trained safety crews. A safety plan for the
Northeastern Complex provides for firefighting brigades of all companies to
assist in the event of major accidents. The Northeastern Complex has rigorous
safety standards concerning construction density and the design of pipelines
and highways.
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Antitrust Matters
Pursuant to Law No. 8,884/94, any transaction that results in a
concentration of market share equal to or greater than 20% of any relevant
market or that involves any company with annual gross sales of R$400.0 million
or more must be submitted to and approved by the Brazilian antitrust
authorities, which consist of three entities: the
Conselho Administrativo de
Defesa Econômica
(the Administrative Council for Economic Defense, or CADE), an
independent body consisting of a president and six members; the
Secretaria de
Defesa Econômica
(the Economic Law Office of the Ministry of Justice, or SDE);
and the
Secretaria de Acompanhamento Econômico
(the Economic Policy Bureau of
the Ministry of Finance, or SEAE). CADE is the antitrust authority ultimately
responsible for reviewing and authorizing transactions that may lead to
economic concentration. SEAE analyzes the economic implications of mergers and
acquisitions, and SDE conducts the principal investigation and analysis,
focusing on the legal aspects of the transaction. As part of the merger review
process, SDE, SEAE and the attorney general of CADE each render preliminary
opinions, which are delivered to the members of CADE. The members of CADE then
render a final decision.
During the year ended December 31, 2001, the Company's predecessor,
Copene, had annual gross sales in excess of U.S.$1.8 billion. Accordingly, Copene
submitted the terms and conditions of the transactions effected in the Auction
to the Brazilian antitrust authorities on September 18, 2001, which will
determine whether the transactions effected in the Auction and the other steps
in the Company's corporate restructuring process adversely impact competitive
conditions in the relevant markets in which the Company competes or whether
they would negatively affect consumers. Brazilian antitrust law does not
prevent parties from closing a transaction on a provisional basis until the
Brazilian antitrust authorities render a final decision. However, if approved,
the effectiveness of the transaction is retroactive to the date on which the
transaction closed. Although SDE and SEAE have issued non-binding opinions in
July 2002 and May 2003, respectively, recommending the unconditional approval
of these transactions, CADE is still reviewing the matter and may not agree
with those opinions and may not approve these transactions unconditionally.
CADE could impose conditions or performance commitments on the Company. Any
such action could result in a material adverse effect on the results of
operations, financial condition and prospects of the Company.
ITEM 5.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion of the Company's financial condition and results
of operations should be read in conjunction with the Company's audited
consolidated financial statements as of December 31, 2002 and 2001 and for the
three years ended December 31, 2002 and the accompanying notes appearing
elsewhere in this annual report, and in conjunction with the financial
information included under "Item 3. Key Information—Selected Financial Data."
This section contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ materially from those
discussed in the forward-looking statements as a result of various factors,
including, without limitation, those set forth in "Cautionary Statement with
Respect to Forward Looking Statements," those set forth in "Item 3. Key
Information—Risk Factors" and the matters set forth in this annual report
generally.
Overview
The Company is the largest petrochemical company in Latin America and one
of the five largest Brazilian industrial companies based on net revenues, with
a diversified portfolio of chemical products, large competitive scale and a
strategic focus on thermoplastics, including polyethylene, polypropylene and
PVC. The Company is the only Brazilian company with integrated first and
second generation petrochemical production facilities, producing 41.4% of the
total volume of olefins, 40.6% of the total volume of polyethylene and
polypropylene, and 66.7% of the PVC, respectively, produced in Brazil during
the year ended December 31, 2002. The Company also sells caustic soda and
various other petrochemicals, chlorine and industrial utilities and services,
and holds 29.5% of the capital stock of Copesul, a first generation
petrochemical producer operating in the Southern Complex, and 35% of the voting
capital stock, representing 34.7% of the total capital stock, of Politeno, a
second generation producer of polyethylene and ethylene vinyl acetate.
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U.S. GAAP Presentation and Reporting Currency
The Company's Consolidated Financial Statements have been prepared in
accordance with U.S. GAAP under Statement of Financial Accounting Standards No.
52, "Foreign Currency Translation" ("SFAS 52"). Except as otherwise
specifically indicated, all financial information in this annual report has
been prepared in accordance with U.S. GAAP and presented in U.S. dollars. For
certain purposes, such as filing financial statements with the CVM and
determining dividend payments and other distributions and tax liabilities in
Brazil, the Company has been and will continue to be subject to the
requirements of the Brazilian Corporate Law, and the Company will continue to
prepare its financial statements in Brazil in accordance with the Brazilian
Corporate Law.
The Company has elected to present its financial statements in U.S.
dollars. For this purpose, amounts in Brazilian currency for all periods
presented have been translated into U.S. dollars in accordance with the
methodology set forth in SFAS 52.
Although the Company presents its financial statements in U.S. dollars,
the Company's functional currency is the Brazilian
real
. Before 1998, the
Company was required under SFAS 52 to use the U.S. dollar as its functional
currency because of the highly inflationary conditions that had been present in
the Brazilian economy. Based on guidelines accepted by the U.S. Securities and
Exchange Commission (the "Commission"), the Company concluded that, as of
January 1, 1998, the Brazilian economy no longer had highly inflationary
conditions because the increase in the general price index had been less than
100% over the previous three years. Accordingly, beginning on January 1, 1998,
the Company changed its functional currency to the
real
because, in accordance
with SFAS 52, a company operating in an environment that is not highly
inflationary is obligated to use the currency of its operating environment as
its functional currency.
Although the Company adopted the
real
as its functional currency, the
Company continued to use the U.S. dollar as its reporting currency, which
requires the Company to translate amounts from
reais
to U.S. dollars in
accordance with SFAS 52. Accordingly, as of December 31, 2002 and 2001 and for
each of the three years in the period ended December 31, 2002:
•
all assets and liabilities have been translated into U.S. dollars
using the applicable year-end rate as published by the Central Bank of
Brazil (2002 - R$3.5333 to U.S.$1.00, 2001 – R$2.3204 to U.S.$1.00);
•
statement of operations and cash flow accounts (including amounts
relative to local currency indexation and exchange variances on assets
and liabilities denominated in foreign currency, which were not
translated prior to 1998) have been translated into U.S. dollars using
the average rate prevailing in the month of the charge or credit to
income; and
•
capital accounts have been translated at historical rates.
Gains and losses resulting from the translation of the financial
statements are included as a component of other comprehensive income in
shareholders' equity, and transaction gains or losses (related to foreign
currency asset or liability) are included in the statement of operations in the
financial income and financial expense accounts. See "—Brazilian Economic
Environment—Inflation and Exchange Rate Variation—Effects of Exchange Rate
Variation."
Critical Accounting Policies
Discussion of Critical Accounting Policies
The presentation of the Company's financial condition and results of
operation often requires the Company's management to make judgments regarding the effects
of matters that are inherently uncertain on the carrying value of the Company's
assets and liabilities. Actual results may differ from those estimated under
different variables, assumptions or conditions. In order to provide an
understanding about how management forms its judgments about future events,
including the variables and assumptions underlying the estimates, and the
sensitivity of those judgments to different variables and conditions, the Company has included
comments related to each of the following critical accounting policies:
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Table of Contents
•
revenue recognition and accounts receivable;
•
costs and inventory valuation;
•
impairment and amortization of permanent assets;
•
valuation of long-term investments;
•
valuation of derivative instruments;
•
pension plans;
•
tax incentives;
•
deferred taxes; and
•
contingencies.
Revenue Recognition and Accounts Receivable
Revenue for product sales is recognized when risk and title to the product
transfer to the customer, which usually occurs at the time goods are delivered.
The allowance for doubtful accounts is recorded in an amount the Company
considers sufficient to cover any probable losses on realization of its
accounts receivable from the Company's customers and is included as selling
expenses; no adjustment is made to net sales revenue. In order to establish
the allowance for doubtful accounts, the Company's management constantly
evaluates the amount and characteristics of the Company's accounts receivables.
When significant delays occur and the likelihood of receiving these payments
decreases, a provision is made. In case receivables in arrears are guaranteed
or there are reasonable grounds to believe they will be paid, no provision is
made.
Costs and inventory valuation
Inventories are comprised of finished goods, work in process, raw
materials, and materials for consumption. Inventories are recorded at the
lower of average cost or realizable value. Inventories of consumption
materials are classified as current and long-term assets based on the Company's
estimates of when they will be consumed.
Impairment and amortization of permanent assets
Goodwill and those intangible assets with indefinite lives are subject to
annual impairment tests based on the estimated market values of the related
reporting units and the intangible assets. These assets are not subject to
amortization beginning in January 2002, as a result of the implementation of
Statement of Financial Accounting Standards no. 142.
The Company performs cash flow studies to determine if the accounting
value of its assets, namely its fixed assets and other intangible assets, is
compatible with the profitability resulting from the respective business units.
If the expected cash flows are lower than the accounting value, the asset will
be subject to a provision for impairment.
Fixed assets and certain intangible assets are regularly recognized as
expenses through depreciation, depletion or amortization. The rates of
depreciation, depletion or amortization are based on management or third-party
estimates of the periods over which these assets can be expected to provide
benefits to the Company.
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Valuation of long-term investments
Investments of a permanent nature are recorded at cost or under the equity
method, depending on the degree of influence over their operations. These
investments are not required to be reduced to their market value, unless the
loss in value is believed to be other than temporary, which the Company
currently believes not to be the case.
Valuation of derivative instruments
The Company utilizes swaps, forwards, options and other derivative
instruments to manage the Company's risks relating to variations in foreign
exchange rates and interest rates. These instruments are recorded at their
estimated fair value, based on market quotations for similar instruments and
assumptions as to future foreign exchange and interest rates.
Pension plans
With respect to the Company's obligations as sponsor of defined benefit
pension plans, the Company relies on calculations performed by independent
actuaries, based on assumptions provided by the Company. The primary
assumptions include interest rates, investment returns, levels of inflation,
mortality rates and future employment levels. These assumptions affect the
Company's liability for accrued pension costs and the amounts the Company is
required to provide each year as the Company's pension cost.
Deferred taxes
The Company recognizes deferred tax assets and liabilities based on the
differences between the financial statement carrying amounts and the tax basis
of assets and liabilities, as well as tax loss carry forwards. The Company
regularly reviews the deferred tax assets for recoverability and establishes a
valuation allowance, as required, based on historical taxable income, projected
future taxable income, and the expected timing of the reversals of existing
temporary differences. In the event the Company or one of its subsidiaries
operate at a loss or is unable to generate sufficient future taxable income, or
if there is a material change in the actual effective tax rates or time period
within which the underlying temporary differences become taxable or deductible,
the Company evaluates the need to adjust the balance of the valuation allowance
for the Company's deferred tax assets.
Contingencies
The Company is currently involved in certain legal and administrative
proceedings that arise from the Company's normal course of business, as
described in Note 13(b) to the Company's consolidated financial statements.
Some of these proceedings involve amounts that are material to the financial
statements. The Company believes that the extent to which these contingencies
are recognized in the Company's financial statements is adequate.
It is the Company's policy to record accrued liabilities for contingencies
that are deemed probable of creating a material adverse impact on the result of
its operations or its financial condition.
The Company is also involved in several legal and administrative
proceedings, which are aimed at obtaining or defending its legal rights with
respect to tax legislation, which the Company believes to be unjust or
unconstitutional. The Company considers these issues to be contingent gains,
which the Company does not recognize in the financial statements until the
contingency has been resolved. When the Company has been granted the temporary
right not to pay the disputed amounts or to offset disputed amounts that have
already been paid against current tax obligations, the Company continues to
maintain a liability for the disputed amounts until the contingency has been
resolved. The Company also accrues arrears interest on the liability, using
the applicable interest rate defined in the tax law.
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The Auction, the Nova Camaçari Acquisition and the Related Party Mergers
On July 25, 2001, Nova Camaçari acquired ESAE in an auction conducted by
the Central Bank. ESAE's principal asset consisted of 56.3% of the capital
stock, representing 63.8% of the voting stock, of Conepar, a Brazilian holding
company, the principal assets of which were 42.6% of the capital stock,
representing 66.7% of the voting stock, of Polialden and 31% of capital stock,
representing 35% of the voting stock, of Politeno. In connection with the
auction, Nova Camaçari also acquired:
•
all of the capital stock of Intercapital, the principal asset of
which was 31.9% of the capital stock, representing 36.2% of the voting
stock, of Conepar; and
•
100% of the capital stock of Proppet.
To finance these acquisitions, Nova Camaçari incurred U.S.$573.5 million
in indebtedness. On July 25, 2001, the Company's predecessor, Copene, acquired
Nova Camaçari for U.S.$40 (forty dollars). As a result, Copene held indirectly
all of the capital stock of Proppet, 66.7% of the voting capital of Polialden
and 35% of the voting capital of Politeno. In September 2001:
•
Nova Camaçari acquired the capital stock of Conepar that it did not
already own from BNDESPAR for U.S.$62.0 million; and
•
Copene merged with Nova Camaçari, Intercapital and Proppet.
On August 16, 2002, OPP Produtos and 52114 Participações merged with and
into the Company. As a result, the Company, directly and indirectly, acquired
all of the voting capital stock of OPP Química, 64.4% of the voting capital
stock of Trikem, 92.3% of the voting capital stock of Nitrocarbono and 29.5% of
the voting capital stock of Copesul. Prior to the Related Party Mergers, ODB
owned all of the voting capital stock of OPP Produtos, and Pronor owned all of
the voting capital stock of 52114 Participações. In connection with the
Related Party Mergers, the Company issued shares representing 43.7% of its
voting capital stock to ODB, a member of the Odebrecht Group, and shares
representing 3.6% of its voting capital stock to Pronor, a member of the
Mariani Group.
Following the Related Party Mergers:
•
the Odebrecht Group owned 44.6% of the voting capital stock of the
Company and owned 39.8% of the voting capital stock of Norquisa, the
principal asset of which is 30.8% of the voting capital stock of the
Company; and
•
the Mariani Group owned 3.6% of the voting capital stock of the
Company and owned 16.1% of the voting capital stock of Norquisa.
In February 2003, the Company completed a public tender offer in Brazil
for the shares of Nitrocarbono not owned by the Company. As a result of this
tender offer, the Company owned more than 99.9% of the voting capital stock of
Nitrocarbono. On March 31, 2003, Nitrocarbono, OPP Química and ESAE merged
with and into the Company.
Accounting Aspects
For purposes of financial statements prepared in accordance with the
Brazilian Corporate Law, the Company accounted for the acquisition of each of
Nova Camaçari, OPP Produtos and 52114 Participações under the purchase method
of accounting as of the respective date of each acquisition. Under this
accounting method, the recorded assets and liabilities of Nova Camaçari, OPP
Produtos and 52114 Participações were transferred to the Company's consolidated
financial statements at their historical amounts, and goodwill was recognized
for the difference between the purchase price and the net acquired assets. For
purposes of U.S. GAAP, the Company also accounted for the Nova Camaçari
Acquisition and the 52114 Merger under the purchase method of accounting as of
the respective date of each acquisition. However, as a result of the common control exercised
by the Odebrecht Group over the Company and OPP Produtos prior to the OPP
Produtos Merger, in accordance with U.S. GAAP, the Company accounted for the
acquisition of OPP Produtos in a manner similar to a pooling-of-interests as if
this acquisition had occurred on July 25, 2001, the date of the Nova Camaçari
Acquisition and the date on which such common control had commenced. As a
result:
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•
the consolidated balance sheets of the Company as of December 31,
2001 included in the Consolidated Financial Statements reflect the
inclusion of the assets and liabilities acquired and assumed by the
Company in the Nova Camaçari Acquisition and the OPP Produtos Merger;
•
the consolidated balance sheets of the Company as of December 31,
2002 included in the Consolidated Financial Statements reflect the
inclusion of the assets and liabilities acquired and assumed by the
Company in the Nova Camaçari Acquisition, the OPP Produtos Merger and
the 52114 Merger;
•
the consolidated statement of operations and cash flow accounts of
the Company for the year ended December 31, 2000 included in the
Consolidated Financial Statements reflect solely the operations and
cash flows of Copene and its consolidated subsidiaries for such year;
•
the consolidated statement of operations and cash flow accounts of
the Company for the year ended December 31, 2001 included in the
Consolidated Financial Statements reflect the operations and cash flows
of the entities acquired in the Nova Camaçari Acquisition and the OPP
Produtos Merger for the period on and after July 25, 2001; and
•
the consolidated statement of operations and cash flow accounts of
the Company for the year ended December 31, 2002 included in the
Consolidated Financial Statements reflect the operations and cash flows
of the entities acquired in the Nova Camaçari Acquisition and the OPP
Produtos Merger for such year and the operations and cash flows of the
entities acquired in the 52114 Merger for the period on and after
August 16, 2002.
Business Segments and Presentation of Segment Financial Data
In 2002, the Company created an organizational structure that it believes
best reflects its business activities and corresponds to its principal products
and production processes. The Company reports its results by market segment to
reflect this organizational structure:
•
Basic Petrochemicals – This segment includes the Company's basic
petrochemical production activities and its supply of electricity,
steam and compressed air to second generation producers, including
certain producers owned or controlled by the Company, in the
Northeastern Complex, and consists of operations historically conducted
by Copene, the Company's predecessor;
•
Polyolefins – This segment includes the Company's activities
related to the production of polyethylene and polypropylene and
ancillary petrochemical derivatives and consists of the operations
historically conducted by OPP Química and by Polialden;
•
Vinyls – This segment includes the Company's activities related to
the production of PVC, caustic soda and chlorine and consists of the
operations historically conducted by Trikem; and
•
Business Development – This segment includes the Company's
activities related to the production of other second generation
petrochemical products, principally the operations historically
conducted by Nitrocarbono and Proppet, and the management of certain of
its minority equity interests, principally its investments in Petroflex
and Cetrel.
The Company reports its business segment data in its U.S. GAAP financial
statements in accordance with SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS 131"). SFAS
131 requires that segment data be presented on the basis of the internal information
that is used by management for assessing performance and making operating
decisions, including decisions regarding the allocation of resources among
segments. Because the Company evaluates and manages segment performance based
on information generated from its statutory accounting records which are
maintained in accordance with the Brazilian Corporate Law, the segment data
included in the Company's U.S. GAAP financial statements is presented under the
Brazilian Corporate Law accounting principles, with certain exceptions related
to the dates when the acquired companies are included in the consolidation.
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Table of Contents
The segment financial information presented in this section has been
translated from
reais
into U.S. dollars at the average rate for each period
presented. Intersegment net revenues related to transfers of basic
petrochemicals and other products were recorded at market prices.
Demand for the Company's Products
Because of the Company's large market share in many of the markets in
which its petrochemical products are sold, fluctuations in Brazilian consumer
demand affect the Company's production levels and net sales revenues.
Brazilian gross domestic product grew at a compound average annual rate of 2.1%
from 1990 through 2002. During the corresponding period, Brazilian consumption
of polyethylene, polypropylene and PVC grew at an average compound rate of
7.7%, with (1) average consumption growth of polyethylene increasing at a
compound average annual rate of 6.5%, (2) average consumption growth of
polypropylene increasing at a compound average annual rate of 11.7% and (3)
average consumption growth of PVC increasing at a compound average annual rate
of 6.1%. Demand for the Company's petrochemical products has historically
demonstrated a high degree of elasticity, generally growing at three to four
times the rate of growth of Brazil's gross domestic product.
The Company anticipates that growth in demand for its petrochemical
products will continue due to (1) increasing consumption of plastic-based
consumer products, (2) the trend towards substitution of traditional packaging
materials, such as glass and paper, with plastics, (3) general economic growth
in Brazil and (4) broader income distribution in Brazil. However, the
Company's estimates about market trends and economic growth may turn out to be
incorrect.
Cyclicality Affecting the Petrochemical Industry
Consumption of the petrochemical products manufactured by the Company has
increased significantly over the past 30 years. Due to this growth in
consumption, producers have experienced alternating periods of insufficient
capacity for these products. Periods of insufficient capacity, including some
due to raw material shortages, have usually resulted in increased selling
prices and operating margins. These periods have often been followed by
periods of capacity additions, which have resulted in declining capacity
utilization rates, selling prices and operating margins.
The Company expects that these cyclical trends in selling prices and
operating margins relating to capacity shortfalls and additions will likely
persist in the future, principally due to the continuing impact of four general
factors:
•
cyclical trends in general business and economic activity produce
swings in demand for petrochemicals;
•
when demand is falling, the high fixed cost structure of the
capital intensive petrochemicals industry leads producers to compete
aggressively on price in order to maximize capacity utilization;
•
significant capacity additions, whether through plant expansion or
construction, can take two to three years to come on-stream and are
therefore necessarily based upon estimates of future demand; and
•
as competition in these products is focused on price, being a
low-cost producer is critical to profitability. This favors the
construction of larger plants that maximize economies of scale but also
leads to major increases in capacity that can outstrip current growth
in demand.
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Sales of the Company's Products
In 2002, sales of by the Basic Petrochemicals Unit, the Vinyls Unit, the
Polyolefins Unit and Business Development Unit represented 45.3%, 15.8%, 35.1%
and 3.8%, respectively, of the Company's net revenue on a combined basis. In
2002, the Company sold approximately 77% of its petrochemical products in
Brazil and 23% to foreign customers. Exports to other countries in the
Americas accounted for 69% of the Company's export sales, with the remainder of
the Company's exports being sold in Europe (12%), in Asia (15%) and in Africa
(4%).
In 2002, sales of the Company's petrochemical products increased as
compared to 2001, despite the economic difficulties faced by Brazil and other
Latin American countries caused by, among other factors, the uncertainty prior
to and immediately following Brazil's October 2002 presidential elections, and
the stoppage for 92 days in 2002 of the pyrolysis plant that is part of the
Olefins 1 Unit operated by the Basic Petrochemicals Unit for scheduled
maintenance and expansion of this facility. As a result, the Company's
shipments of petrochemical products increased in 2002 by 1.9% as compared to
2001.
The utilities business within the Basic Petrochemicals Unit consists of
the production of electricity, steam, compressed air and treated water for sale
to second generation petrochemical producers in the Northeastern Complex,
including those owned by the Company, and represented 9.5% of the Basic
Petrochemicals Unit's net sales in 2002.
Pricing of the Company's Products
Historically, pricing of the Company's products has been influenced by,
among other factors, the following:
•
international prices for petrochemical products, which are
significantly influenced by industry capacity utilization rates and by
significant increases in capacity in the industry;
•
demand for petrochemical products as a result of the level of
growth of the Brazilian economy and the economics of other South
American countries;
•
fluctuations in the exchange rate between the
real
and the U.S. dollar; and
•
economic conditions in Brazil and other South American countries, including prevailing inflation rates.
The Company negotiates the
real
prices for certain of its products,
principally polyethylene, polypropylene and PVC, on a monthly basis with its
customers. The Company attempts to revise its prices to reflect changes in the
international market prices of these products and the appreciation or
depreciation of the
real
against the U.S. dollar. However, during periods of
high volatility in either international market prices or the exchange rate, the
Company is sometimes unable to reflect these changes fully in its prices.
Basic
Petrochemical Products.
Prices for ethylene produced by the Company
are calculated based on a margin sharing system. See"—The Basic Petrochemicals
Unit—Sales and Marketing of Basic Petrochemical Products." The margin for the
whole ethylene chain is calculated and split between the Company and its
customers in proportion to the cost of investments of each company in the
chain. Under this formula, the Company shares the benefit or burden of higher
or lower prices for ethylene derivatives, such as polyethylene, with its
customers. Conversely, the Company also shares the benefit or burden of lower
or higher naphtha prices with its customers.
The Company calculates the monthly price of propylene by multiplying the
monthly ethylene price that it charges (including Brazilian taxes) by the ratio
of the European contract price for propylene to the European contract price for
ethylene. The price of butadiene is determined by using the European contract
price and, unlike prices for the Company's other products, includes freight
costs.
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Other
Products.
The prices of the products of the Company's Polyolefins
Unit, Vinyls Unit and Business Development Unit generally trade on the basis of
prices determined in highly competitive markets. Nevertheless, the Company
generally obtains higher prices in Brazil for these products than the prices it
obtains when it export its products. The difference in prices between the
Brazilian and export markets results principally from:
•
higher transportation costs in Brazil; and
•
tariffs and duties.
In addition, the Company is an integrated producer of caustic soda,
chlorine and PVC, and the Vinyls Unit is able to benefit from gains achieved
through countercyclical pricing of its vinyls products. When a strong
international demand for PVC exists, thereby resulting in higher prices for
PVC, the Company and other producers in the PVC production chain produce
surplus volumes of EDC, resulting in lower prices for EDC. Conversely, when
lower international demand for PVC exists, thereby depressing the price of PVC,
less EDC is produced, permitting the Company to realize higher prices for EDC.
Prices for caprolactam produced by the Company's Business Development Unit
generally fluctuate in accordance with international market prices, but because
the Company sells approximately 80% of its caprolactam production to one
customer, it has generally been unable to assess any material premium over the
prevailing international market price on sales of caprolactam.
Cost of Sales and Services
Historically, the Company's costs for certain raw materials, principally
naphtha, ethylene and propylene, and the costs of certain catalysts required in
the Company's production processes, have been incurred in U.S. dollars or are
U.S. dollar-linked. Other costs of production, consisting primarily of other
raw materials, principally salt used in the vinyls segment, labor, energy and
depreciation costs, are incurred in
reais
. Approximately 77% of the Company's
costs and operating expenses are denominated in U.S. dollars or are U.S.
dollar-linked, with the remaining 23% denominated in
reais
.
The Company's cost of naphtha, the primary raw material used in the
production of the Company's basic petrochemical products, represented
approximately 66% and 70% of the Company's cost of sales for 2002 and 2001 on a
combined basis giving effect to the Nova Camaçari Acquisition and the Related
Party Mergers as if they had occurred on January 1, 2000 and including naphtha
purchased by the Company's Basic Petrochemicals Unit and naphtha used to
produce the ethylene that the Company's Polyolefins Unit purchases from
Copesul. The cost of naphtha, varies in accordance with international market
prices, which fluctuate depending upon the supply and demand for oil and other
refined petroleum products. Prior to August 9, 2000, the Company was required
under Brazilian law to purchase all of its naphtha requirements from Petrobras,
and naphtha prices were established monthly by Petrobras. During this period,
Petrobras established naphtha prices on a monthly basis based upon a pricing
formula that took into account international oil prices and the costs to import
naphtha into Brazil. The formula itself was memorialized in a federal
government document prepared by the Finance and Energy Ministries and signed by
the Brazilian President.
Beginning on August 9, 2000, the Brazilian government implemented a policy
of free naphtha price negotiation and permitted the Company to purchase naphtha
from suppliers other than Petrobras. The Company has entered into a 10-year
renewable contract with Petrobras under which the prices it pays Petrobras for
naphtha in any month are established based on the average ARA quotations for
naphtha in U.S. dollars during the previous month converted into
reais
at the
U.S. dollar/
real
exchange rate in effect on the last day of the previous month.
In addition, the Company imports naphtha through its terminal at Aratu under
short-term contracts and spot market purchases. The prices for naphtha under
these contracts are established based on ARA quotations as well.
Ethylene is the primary raw material used by the Polyolefins Unit in the
production of polyethylene is produced by the Basic Petrochemicals Unit and by
Copesul. The Company's cost of ethylene purchased from Copesul represented
approximately 52% and 56% of the Company's cost of sales for 2002 and 2001 on a
combined basis giving effect to the Nova Camaçari Acquisition and the Related Party
Mergers as if they had occurred on January 1, 2000. The cost of ethylene is
subject to the margin sharing system discussed above under "—Pricing of the
Company's Products—Basic Petrochemicals Products." As a result, the price for
ethylene is significantly affected by international market prices for naphtha.
The cost of propylene, the primary raw material used by the
Polyolefins segment
in the production of polypropylene, is also significantly affected by
international market prices as discussed above under "—Pricing of the Company's
Products—Basic Petrochemical Products."
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The Company obtains salt, the primary raw material used by the Vinyls
segment, from mines it operates in the State of Alagoas. The Company estimates
that its salt reserves are sufficient to produce chlorine (with which it
produces EDC) at expected rates of production for in excess of 50 years.
The Company's energy cost represented approximately 2.5% and 2.2% of the
Company's cost of sales for 2002 and 2001, respectively, on a combined basis
giving effect to the Nova Camaçari Acquisition and the Related Party Mergers as
if they had occurred on January 1, 2001. In particular, the Company's vinyls
segment has significant electricity requirements. CHESF supplies electricity to
the Company under a long term contract expiring in 2007. Copel, an electricity
distributor in southern Brazil serving the State of Rio Grande do Sul, supplies
electricity to the Company under a contract expiring in December 2003.
Tractabel, an electricity distributor in southern Brazil serving the State of
Rio Grande do Sul, supplies electricity to the Company under a long-term
contract expiring in 2007. Eletropaulo Metropolitana–Eletricidade de São Paulo
S.A. ("Eletropaulo"), the electricity distributor in the City of São Paulo,
supplies electricity to the Company under a one-year renewable contract.
Following the expiration of its power purchase agreement with Copel, the
Company will purchase all of its electricity needs in southern Brazil from
Tractabel under its existing contract. The Company generates all of its
electricity requirements for its operations in the Northeastern Complex and
sells the excess electricity that it generates to other second generation
producers in the Northeastern Complex.
Capacity Utilization
The Company's operations are capital intensive. Accordingly, to obtain
lower unit production costs and maintain adequate operating margins, the
Company seeks to maximize the capacity utilization rate at all of its
production facilities. On a pro forma basis, giving effect to the Nova
Camaçari Acquisition and the Related Party Mergers as if they had occurred on
January 1, 2001, the Company's average capacity utilization was approximately
86% in 2002 and 81% in 2001. Two recognized petrochemical industry consultants
project that demand for thermoplastic products over the next few years will
result in an increase of capacity utilization to approximately 90%.
The table below sets forth capacity utilization with respect to certain of
the Company's principal products for the years ended December 31, 2002 and 2001
on a combined basis, giving effect to the Nova Camaçari Acquisition and the
Related Party Mergers as if they had occurred on January 1, 2001.
Year ended December 31,
2002
2001
Ethylene
82
%
89
%
Propylene
79
%
83
%
Polyethylene
78
%
73
%
Polypropylene
92
%
84
%
PVC
84
%
76
%
PET
87
%
91
%
Equity Investments
The Company owns 29.5% of the capital stock of Copesul. The Company records
its proportional interest in the net income (loss) of Copesul as equity in
earnings of affiliates, net in its income
statement. The Company accounts for its equity investment in Copesul in affiliated companies.
In addition, certain of the plants in the Company's
Polyolefins Unit purchase ethylene and propylene from Copesul under long-term
contracts.
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The
Company owns 35% of the voting capital stock, representing 34.7% of
the total capital stock, of Politeno. The Company records its proportional
interest in the net income (loss) of Politeno as equity in earnings of
affiliates, net in its income statement. The Company accounts
for its equity investment in Copesul in affiliated companies. In addition, the Company's Basic Petrochemicals Unit sells ethylene
and propylene to Politeno under long-term contracts.
Brazilian Economic Environment
As a Brazilian company with substantially all of its operations in Brazil,
the Company is significantly affected by economic and social conditions in the
country. In particular, the Company's results of operations and financial
condition are impacted by the growth rate of Brazil's gross domestic product.
See "—Gross Domestic Product." The Company's results of operations and
financial condition are also affected by the rate of Brazilian inflation and
the rate of depreciation of the
real
against the U.S. dollar. See "—Inflation
and Exchange Rate Variation."
Gross Domestic Product
After several years of steady economic growth following the introduction
of the Real Plan in 1994, the Brazilian economy entered into a downturn in late
1998 that was exacerbated by a significant currency devaluation beginning in
mid-January 1999. As a result, gross domestic product, or GDP, grew in
constant terms by 0.2% in 1998 and by 0.8% in 1999.
The recovery of the Brazilian economy in 1999, in the wake of the 32.4%
devaluation of the
real
against the U.S. dollar and the strong fiscal
adjustment produced by the public sector, led to enhanced consumer confidence.
In 2000, GDP in Brazil grew by 4.4%. GDP in Brazil increased by 1.4% in 2001,
principally as a result of an electric energy shortage in Brazil, decreased
consumer confidence following the Argentine crisis and the aftermath of the
September 2001 terrorist attacks in the United States.
Brazilian
average consumption of the Company's second-generation products decreased
by 1.5% in 2001 as compared to average consumption of such products in 2000
because many of the Company's customers were required to reduce the scope of their
operations as a result of energy rationing in Brazil during 2001.
In 2002, GDP in Brazil increased by 1.5%. GDP growth in Brazil was
inhibited in 2002 due to the economic uncertainties surrounding Brazil's
October 2002 presidential elections and other factors. However, in 2002,
average consumption of the Company's products increased by 3.1% over the
depressed 2001 levels and 1.6% over 2000 levels.
Inflation and Exchange Rate Variation
Prior to July 1994, Brazil had for many years experienced high and
generally unpredictable rates of inflation and steady devaluation of its
currency relative to the U.S. dollar. Since the introduction of the
real
as
the new Brazilian currency in July 1994, inflation has remained relatively low
compared to historical periods.
The following table sets forth, for the years shown, Brazilian inflation
and the devaluation of the
real
against the U.S. dollar as measured by
comparing the daily exchange rates published by the Central Bank on the last
day of each year:
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Year ended December 31,
2002
2001
2000
1999
1998
Inflation (1)
25.3
%
10.4
%
9.9
%
20.1
%
1.8
%
Inflation (deflation) (2)
9.9
%
7.1
%
4.4
%
8.6
%
(1.8
%)
Nominal depreciation
of the
real
against the U.S
dollar
34.3
%
15.7
%
8.5
%
32.4
%
7.6
%
(1)
Based on the
Índice Geral
de Preços - Mercado
(the Brazilian General
Price Index—Market, or IGP-M) published by the
Fundação Getúlio Vargas
, or
the Getúlio Vargas Foundation.
(2)
Based on the
Índice de Preços ao Consumidor
(the Brazilian Consumer Price
Index, or IPC) published by
Fundação Instituto de Pesquisas Econômicas
, or
the Economic Research Institute Foundation.
Inflation and exchange rate variations have, and may continue to,
substantially effect the Company's financial condition and results of
operations as well as the reported value of the Company's assets and
liabilities in U.S. dollars.
Effects of inflation
Before January 1, 1998, Brazil was considered to be a highly inflationary
economy. For periods before January 1, 1998, the Company translated its
financial statements into U.S. dollars from financial statements presented in
reais,
in accordance with the provisions of SFAS 52. Under the financial
statement procedures adopted by the Company for these periods, the Company
translated non-monetary items (inventories, property, plant and equipment and
accumulated depreciation and depletion, as well as shareholders' equity
accounts) into U.S. dollars at historical exchange rates. The Company
translated monetary assets and liabilities denominated in Brazilian currency at
period-end exchange rates. The Company included the translation gain or loss
resulting from this restatement process in the applicable statements of
operations.
As of January 1, 1998, the Company concluded that the Brazilian economy
had ceased to be highly inflationary for purposes of SFAS 52 and changed its
functional currency from its reporting currency of U.S. dollars to the
Brazilian
reais
. Therefore, on January 1, 1998, the Company translated the
U.S. dollar amounts of non-monetary assets and liabilities into
reais
at the
then-current exchange rate. These translated amounts became the new accounting
bases for such assets and liabilities. At each period ended after January 1,
1998, the Company has translated all of its assets and liabilities into U.S.
dollars at the then-current applicable exchange rate and all accounts in the
statements of operations and cash flows at the average rates prevailing during
the applicable period. The Company has included the translation gain or loss
resulting from this translation process in the cumulative translation
adjustments component of shareholders' equity.
One significant effect of inflation and exchange rate variations on the
Company relates to its costs and operating expenses. A significant percentage
of the Company's costs and operating expenses are in
reais
and tend to increase
with Brazilian inflation because the Company's suppliers and service providers
generally increase prices to reflect Brazilian inflation. As expressed in U.S.
dollars, however, these increases have been typically offset at least in part
by the effect of the appreciation of the U.S. dollar against the
real
. If the
rate of Brazilian inflation increases more rapidly than the rate of
appreciation of the U.S. dollar against the
real
, then, as expressed in U.S.
dollars, the Company's costs and operating expenses may increase and assuming
constant U.S. dollar sales prices, the Company's profit margins may decrease.
If the rate of appreciation of the U.S. dollar exceeds the rate of Brazilian
inflation, then, as expressed in U.S. dollars, the Company's costs and
operating expenses may decrease and, assuming constant U.S. dollar and sales
prices, the Company's profit margins may increase.
Effects of exchange rate variation
Since the Company adopted the
real
as its functional currency on January
1, 1998, the depreciation and appreciation of the
real
against the U.S. dollar
has impacted, and will continue to impact, the Company's results of operations
in several ways. The Company's reporting currency for all periods is the U.S.
dollar. The Company maintains its financial records in
reais
, and translates its statements of
operations into U.S. dollars at the average rate published by the Central Bank
of Brazil for the corresponding period. The amounts reported in the Company's
statements of operations in any given period are reduced or increased at the
same rate as the
real
has depreciated or appreciated in relation to the U.S.
dollar during that period.
72
Table of Contents
The Company has significant amounts of U.S. dollar denominated
liabilities, as well as operating expenses denominated in or linked to U.S.
dollars. In addition, a substantial portion of the Company's revenues are
linked to U.S. dollars.
Virtually all of the Company's sales are of petrochemical products, which
generally trade freely in the international markets at prices expressed in U.S.
dollars. The Company generally attempts to set prices that take into account,
and vary to reflect changes in, the international market prices for its
petrochemical products and variations in the exchange rate. As a result,
although substantially all of the Company's revenues are in
reais
,
approximately 76% of the Company's sales in fiscal year 2002 were linked to
U.S. dollar-based international market prices. When the
real
depreciates
against the U.S. dollar, assuming international market prices remain constant
in U.S. dollars, the Company increases the prices for its products in
reais
(to
the extent possible in light of then-prevailing market conditions), and the
Company's net revenues in
reais
increase. Conversely, when the
real
appreciates against the U.S. dollar, assuming international market prices
remain constant in U.S. dollars, the Company generally decreases the price of
its products in
reais,
and the Company's net revenues in
reais
tend to decrease
as well. In periods of high volatility in the U.S. dollar-
real
exchange rate,
there is usually a lag between the time that the U.S. dollar appreciates and
the time that the Company can effectively pass on such increased costs in
reais
to its customers in Brazil. Such pricing mismatches decrease when fluctuations
in the U.S. dollar-
real
exchange rate are less volatile. These increases and
decreases in the Company's
reais
net revenue, however, are not reflected in the
Company's net revenue when reported in U.S. dollars.
During fiscal year 2002, approximately 66% of the Company's cost of sales
was represented, directly and indirectly, by the cost of naphtha, which is U.S.
dollar-denominated, and an additional 11% of the Company's cost of sales was
U.S. dollar-denominated or U.S. dollar-linked. The devaluation of the
real
has
an adverse effect on the cost of naphtha as well as other U.S. dollar-linked or
imported raw materials. As a result, when the
real
depreciates against the
U.S. dollar, assuming these costs remain constant in U.S. dollars, the cost for
the Company's products in
reais
increases and the Company's net operating
revenues in U.S. dollars decrease. Conversely, when the
real
appreciates
against the U.S. dollar, assuming these costs remain constant in U.S. dollars,
the cost for the Company's products in
reais
decreases and the Company's net
operating revenues in U.S. dollars increase. These decreases and increases in
the Company's
reais
net operating revenues, however, are not reflected in the
Company's net operating income when reported in U.S. dollars.
Another effect of devaluation is that the Company's operating costs and
expenses when expressed in U.S. dollars tend to decline. This happens
primarily because a portion of the Company's costs and a substantial portion of
the Company's operating expenses are denominated in
reais
. During the last
several years, the Company's
reais
-denominated costs and expenses have been
increasing at a rate slower than the devaluation of the
real
. Accordingly, the
effect has been to decrease costs of locally supplied products and services
when reported in U.S. dollars, and consequently to increase the Company's net
operating income when reported in U.S. dollars.
In recent periods, devaluation of the
real
has had the following effects,
among others, on the Company's balance sheet and results of operations:
•
The translation effects of the Company's non-
real-
denominated
assets and liabilities held in Brazil (
e.g.
, cash, cash equivalents and
short term investments and financial obligations) are recorded in the
Company's statements of operations, which are offset, in part, with
respect to monetary assets by monetary indexation of
real
-denominated
financial instruments. Primarily because of the Company's substantial
liabilities denominated in foreign currency, the Company recorded a
U.S.$596.0 million net foreign exchange loss in its 2002 statement of
income, compared to a U.S.$136.1 million net foreign exchange loss in
2001 and a U.S.$45.3 million net foreign exchange loss in 2000. To the
extent these losses are not realized in a transaction (such as the repayment of the debt in the corresponding
period in which a devaluation occurs), the foreign exchange loss is added
back for purposes of determining the Company's cash flow.
73
Table of Contents
•
The Company's
real
-denominated assets and liabilities in Brazil,
primarily accounts receivable, inventories and property, plant and
equipment, cash and cash equivalents and government securities, pension
plan liabilities, health care benefits and deferred income taxes, are
all translated into U.S. dollars at the official exchange rate
applicable at each balance sheet date as reported by the Central Bank.
Therefore, any depreciation of the
real
against the U.S. dollar has
been reflected as a reduction in the U.S. dollar value of those assets
and liabilities, charged directly to shareholders' equity, included in
the cumulative translation adjustment account. These currency
translation effects are beyond the control of the Company's management.
Accordingly, the Company recorded a U.S.$326.1 million credit
(resulting from an excess of liabilities over assets) directly to
shareholders' equity in its statement of changes in shareholders'
equity for 2002, without affecting its net income, to reflect the
nominal devaluation of the
real
against the U.S. dollar during 2002 of
approximately 34.3%. This compared to a charge of U.S.$28.1 million
in 2001 to reflect the nominal devaluation of 15.7% during 2001 and a
charge of U.S.$112.9 million in 2000 to reflect the nominal devaluation
of 8.5% during 2002.
Foreign currency translation adjustments reflecting the devaluation of the
real
may have a significant impact on the balance sheet of the Company because
its assets are primarily denominated in
reais
, but a material portion of its
liabilities are denominated in foreign currencies or linked to foreign
currencies. The reductions in the Company's asset values charged to
shareholders' equity, however, do not necessarily adversely affect the
Company's cash flows, because the Company's revenues and cash earnings are
linked in large part to the U.S. dollar, and a portion of its operating
expenses are linked to the
real
.
The devaluation of the
real
also impacts the amount of retained earnings
available for distribution by the Company as dividends when measured in U.S.
dollars. Amounts reported as available for distribution in the Company's
statutory accounting records prepared under the Brazilian Corporate Law
decrease or increase, as the case may be, when measured in U.S. dollars as the
real
depreciates or appreciates, respectively, against the U.S. dollar. In
addition, the devaluation of the
real
creates foreign exchange gains and losses
that are included in the results of operations determined under accounting
principles set forth under the Brazilian Corporate Law that indirectly affect
the amount of unappropriated earnings available for distribution.
Risk management activities
Because the Company borrows in the international markets to support its
operations and investments, it is exposed to market risks from changes in
foreign exchange and interest rates. Export sales, which generate receivables
payable in U.S. dollars, do not cover all of the Company's U.S. dollar
liabilities.
Braskem developed a risk management policy as from December 31, 2001 with
the following objectives: maintain coverage of principal and interest
settlements (consolidated) maturing within 12 months for, at least (i) 60% of
Braskem's total U.S.-dollar indebtedness that is related to exports (trade
finance), excluding Advances on Currency Contracts (ACCs) with a remaining
maturity of up to 6 months and Advances on Export Contracts (ACEs) and (ii) 75%
of the total debt in U.S. dollars unrelated to exports (non-trade finance).
Compliance with this policy varies based upon applicable market conditions,
credit availability and cash balances.
To further mitigate its exposure to exchange rate risk, the Company tries,
when possible, to borrow for its working capital needs using trade finance
loans, which funding is generally available at a lower cost because it is
linked to the Company's U.S. dollar exports. The Company cannot assure,
however, that, in the future, U.S. dollar revenues that it generates from
exports will be in an amount sufficient to cover its U.S. dollar trade finance
liabilities.
74
Table of Contents
Effect of Taxes on the Company's Income
Income Tax and Social Contribution Tax
Income taxes in Brazil generally include federal income tax and social
contribution. The composite tax rate is 34%, comprised of income tax (15%,
plus a surtax of 10% on taxable income exceeding R$240,000 per year) and social
contribution tax (9%). The rate of federal social and contribution tax has
fluctuated between 9% and 12% in 2000, and has been 9% since 2001. This tax is
not deductible for federal income tax purposes. The Company is contesting the
constitutionality of this tax. See Note 11(e) to the Consolidated Financial
Statements.
The Company has available certain federal tax exemptions based upon
federal legislation that offers fiscal incentives to companies that locate
their manufacturing operations in the northeastern region of Brazil. These
exemptions entitle the Company to pay only 25% of the statutory income tax rate
on the profit arising from the sale of basic petrochemical products and
utilities until 2011. Trikem is exempt from corporate income tax until 2001 on
the results of its industrial operations at its PVC plant in Bahia. Trikem is
entitled to pay only 25% of the statutory income tax rate until 2008 on the
results of its industrial operations at its PVC plant in Alagoas. See Note
11(d) to the Consolidated Financial Statements.
Trikem's production of caustic soda and EDC in the States of Bahia and
Alagoas, and the Company's production of DMT are not covered by these
exemptions, but in accordance with Law No. 9,532/97, the Company is entitled to
pay with respect to the profits arising from sales by these plants:
•
62.5% of the statutory income tax rate from January 1, 1998 to December 31, 2003;
•
75% of the statutory income tax rate from January 1, 2004 to December 31, 2008; and
•
87.5% of the statutory income tax rate from January 1, 2009 to December 31, 2013.
At the end of each year, if the Company or any of its affected
subsidiaries has taxable profit resulting from the operations described above,
the amount of the income tax exemption or reduction is credited to a capital
reserve, which can only be used to increase capital or absorb losses.
Due to operating losses sustained by the Company in the past, the Company
and its subsidiaries had U.S.$535.0 million in tax loss carryforwards available
at December 31, 2002, of which U.S.$3.1 million have been used as the basis for
recognizing net deferred tax assets and the remainder of which have a full
valuation allowance. Tax loss carryforwards available for offset in Brazil do
not expire. However, the annual offset is limited to 30% of the adjusted net
profit of the Company. This limit also affects the social contribution on net
profits.
Other Taxes
The Company is subject to a number of Brazilian taxes in addition to the
corporate income tax and the social contribution tax. Changes in Brazilian tax
legislation can adversely impact the Company's results of operations. Some of
the other Brazilian taxes applicable to the Company are described below.
Federal excise tax (IPI)
The
Imposto sobre Produtos Industrializados
(the Federal Excise Tax or
"IPI"), is a federal excise tax, assessed at the time of sale of manufactured
products either to another manufacturer or to the retailer of the ultimate
customer. Importers also pay this tax at the time the products are imported.
The IPI is charged on a non-cumulative basis, so that the tax assessed in
previous transactions may be credited against the amounts due in subsequent
transactions. Export sales are currently exempt from IPI. The Company's
Polyolefins products are taxed at the rate of 5%.
The Company recorded revenues of U.S.$284.5 million in 2002 relating to a
credit for IPI in respect of purchases of raw materials that are in a zero
percent tax bracket, which amount includes approximately U.S.$75.0 million that
had already been offset against taxes payable in prior years. The Company
recognized a portion of these revenues in taxes recoverable, including U.S.$67.5 as current
assets and U.S.$148.8 as non-current assets. This tax credit was granted based
on a decision of the Brazilian Federal Supreme Court on December 19, 2002.
Although the Federal government has filed an appeal of certain aspects of this
decision, such appeal will not affect the validity of this tax credit, and for this reason, the Company decided to recognize this tax credit
in its Consolidated Financial Statements for the year ended
December 31, 2002. As the tax
credit only applies to the Company's operations in the State of Rio Grande do
Sul, the Company has also brought litigation against the federal government in
respect of its purchases of raw materials in the States of São Paulo, Bahia and
Alagoas, seeking to obtain a similar tax credit.
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Table of Contents
State value added taxes (ICMS)
Imposto sobre Operações Relativas à Circulação de Mercadorias e sobre
Prestações de Serviços de Transporte Interestadual e Intermunicipal e de
Comunicação
(the State Value Added Tax or
"ICMS"
) is a state value-added tax
imposed on sales of goods and the rendering of telecommunication and
transportation services at rates that may vary from 7% to 30%, depending on the
product sold and the specific regulations of each state. The calculation basis
of the tax is the price of the transaction, net of invoiced discounts and
returns (in the case of sale of goods). ICMS is also charged on a
non-cumulative basis, so that the tax assessed in previous transactions may be
used as a credit to be offset against the amounts due in subsequent
transactions. States impose specific rules on interstate transactions
involving oil, natural gas and their byproducts, the revenues from which are
taxable. Export sales are currently exempt from ICMS.
Other taxes on revenues (PIS and COFINS)
Other taxes on revenues include two federal contribution taxes, the
Programa de Integração Social
(the Social Integration Program or "PIS"), and
the
Contribuição para Financiamento da Seguridade Social
(the Contribution for
Social Security Financing or "COFINS"). The rate for COFINS is currently 3%
and for PIS is currently 1.65%.
PIS finances special social programs through the collection of a federal
tax on gross revenues. PIS may be charged on a cumulative or non-cumulative
basis, depending on the type of activities performed by the Company. A company
may be subject to both taxation regimes, in case it develops different kinds of
activities. Cumulative PIS is charged at a rate of 0.65%, and non-cumulative
PIS is charged at a rate of 1.65%. The Company pays PIS on its gross revenues
(except in respect of automotive gasoline sales) on a non-cumulative basis at a
rate of 1.65%. The Company pays PIS on its gross revenues in respect of
automotive gasoline sales on a cumulative basis at a rate of 2.7%. COFINS
finances special social programs through the collection of a federal tax on
gross revenues of 3%. This tax is charged on a cumulative basis on each
transaction in the supply chain. Export sales are currently exempt from both
of these taxes as long as the proceeds of such sales are remitted back to
Brazil.
Tax on bank account transactions (CPMF)
The
Contribuição Provisória sobre Movimentação Financeira
(the Provisional
Contribution on Financial Movements or "CPMF") is a provisional tax imposed on
all transactions involving the debit or withdrawal of money from a bank account
in Brazil. The CPMF rate has fluctuated between 0.20% to 0.38% since its
adoption in 1997. Since March 18, 2001, the rate has been 0.38%, which will
remain in effect through December 2003. From January through December 2004,
the applicable rate will decrease to 0.08%, after which the tax is scheduled to
expire.
Tax Disputes
The Company is currently involved in several tax proceedings as discussed
in Note 13 to the Company's Consolidated Financial Statements. The
Company has established reserves based on its estimated costs of resolving
those claims in which the Company believes it has a probable loss. The tax
contingencies relate primarily to the PIS and COFINS taxes, the IPI tax, the
corporate income tax and social security contributions. The Company does not
believe these tax proceedings will have a material adverse effect on its
financial position. It is possible, however, that future results of operations
could be materially affected by changes in the Company's assumptions and the
effectiveness of the Company's strategies with respect to these tax
proceedings. For more information on the Company's tax proceedings, see "Item 8. Financial
Information—Consolidated Financial Statements and Other Financial
Information—Legal Proceedings."
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Table of Contents
Results of Operations
The discussion of results of operations, comparing 2002 to 2001 and 2001
to 2000, is provided on a historical basis and is followed by a supplemental
discussion on an unaudited pro forma basis, which gives effect to the Nova
Camaçari Acquisition and the Related Party Mergers as if they had occurred on
January 1, 2001. The 52114 Merger was structured as a stock-for-stock exchange
and was accounted for by Braskem as an acquisition of 52114 Participações using
the purchase method of accounting. As a result of the Nova Camaçari
Acquisition, OPP Produtos and Copene were under the common control of the
Odebrecht Group after July 25, 2001. As a result of the merger of OPP Produtos
with Copene to form Braskem, Braskem was required to represent its financial
results as if the OPP Produtos Merger had occurred on July 25, 2001, the date
on which OPP Produtos and Copene came under the common control of the Odebrecht
Group.
The acquisitions of Nova Camaçari, OPP Produtos and 52114 Participações
significantly affected the results of Braskem due to the significant size of
their operations in relation to the operations of Copene, Braskem's
predecessor. Therefore, the financial results of Braskem for periods
subsequent to July 25, 2001, the date of the Nova Camaçari Acquisition, are not
comparable to periods prior to the Nova Camaçari Acquisition. In order to
enhance comparability and make an analysis of the results of 2002 and 2001 more
meaningful, after the following discussion on a historical basis, the Company's
management has provided a supplemental discussion based upon unaudited proforma
financial information for 2002 and 2001 as if the Nova Camaçari Acquisition and
the Related Party Mergers had occurred on January 1, 2001.
Although the Consolidated Financial Statements have been prepared in
accordance with U.S. GAAP, pursuant to SFAS 131, the segment information
presented in this section has been prepared in accordance with accounting
principles determined by the Brazilian Corporate Law, which differ in certain
significant respects from U.S. GAAP, and translated into U.S. dollars using the
average rate prevailing in the month of the charge or credit to income. The
Company's discussion and analysis of the results of operations of its business
segments is based upon such segment financial information. As a result, the
financial information presented in this section with respect to the Company's
business segments are not directly comparable to the consolidated results of
the Company presented in this section.
Because the results of operations of Company's business segments, other
than the Basic Petrochemical segment, are not comparable in any of the periods
presented due to the effects of the Nova Camaçari Acquisition and the Related
Party Mergers, the Company has also presented an analysis of the historical
results of operations or the historical combined results of the principal
business unit that comprise each of its business segments, other than the Basic
Petrochemical segment.
The financial information of the Basic Petrochemicals segment is derived
from the financial statements of the Company for the years ended December 31,
2002, 2001 and 2000 prepared in accordance with accounting principles
determined by the Brazilian Corporate Law. Because the results of operations
of the Basic Petrochemcals segment are included in the Company's results of
operation for the years ended December 31, 2002, 2001 and 2000, no separate
analysis of the combined results of operations is presented comparing fiscal
years 2002 and 2001.
The financial information for OPP Química and Polialden, the subsidiaries
that comprise the Polyolefins segment, is derived from the financial statements
of OPP Química and Polialden for the years ended December 31, 2002 and 2001
prepared in accordance with accounting principles determined by the Brazilian
Corporate Law.
The financial information for Trikem, the subsidiary that comprises the
Company's Vinyls segment, is derived from the financial statements of Trikem
for the years ended December 31, 2002 and 2001 prepared in accordance with
accounting principles determined by the Brazilian Corporate Law.
The financial information for Nitrocarbono and Proppet, the subsidiaries
that comprise the Business Development segment, is derived from the financial
records of Nitrocarbono for September to December 2002 and financial records of
the Company with respect to its PET business. The Business Development Unit of
the Company is responsible for managing certain of the Company's investments,
principally its investments in Petroflex and Cetrel. However, as the results
of the Company's investments managed by the Business Development Unit are
reported as equity in earnings (losses) of affiliates, the results of these
companies are not included in the segment discussions included below.
77
Table of Contents
Historical Discussion
The following table sets forth the certain historical consolidated
financial information of the Company for the years ended December 31, 2002,
2001 and 2000.
Year ended December 31,
2002
2001
2000
(in thousands of U.S. dollars, except percentages)
Net sales
U.S.$
2,391,116
U.S.$
1,771,891
U.S.$
1,555,100
Cost of sales
(1,900,987
)
(1,447,207
)
(1,252,357
)
Gross profit
490,129
324,684
302,743
Selling, general and administrative expenses
(252,475
)
(80,632
)
(77,035
)
Credit from Federal Excise Tax (IPI)
284,509
—
—
Operating income
522,163
244,052
225,708
Financial income
167,854
80,448
94,869
Financial expenses
(1,159,842
)
(294,593
)
(134,000
)
Other non-operating expenses
(57,281
)
(26,312
)
(2,494
)
Income tax (expense) benefit
(20,422
)
14,332
(2,937
)
Equity in earnings of affiliates, net
22,467
(6,090
)
6,889
Minority interest
65,024
(63,848
)
15
Cumulative effect of a change in accounting
principle, net of income tax effect
—
1,767
—
Net income (loss)
U.S.$
(460,037
)
U.S.$
(50,244
)
U.S.$
188,050
Gross Margin (%)
20.5
18.3
19.5
Operating Margin (%)
21.8
13.8
14.5
The following table sets forth certain historical financial information
with respect to the Company's business segments for the years ended December
31, 2002, 2001 and 2000.
Year ended December 31,
2002
2001
2000
(in thousands of U.S. dollars, except percentages)
Basic Petrochemicals
Net sales
U.S.$
1,127,142
U.S.$
1,330,987
U.S.$
1,568,713
Cost of sales
(972,506
)
(1,129,833
)
(1,252,357
)
Gross profit
154,636
201,153
316,356
Operating income
84,348
132,255
218,335
Gross Margin (%)
13.7
%
15.1
%
20.2
%
Operating Margin (%)
7.5
%
9.9
%
13.9
%
Polyolefins
Net sales
U.S.$
873,748
U.S.$
341,364
—
Cost of sales
(729,351
)
(245,246
)
—
Gross profit
144,398
96,118
—
Operating income
312,667
52,570
—
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Table of Contents
Year ended December 31,
2002
2001
2000
(in thousands of U.S. dollars, except percentages)
Gross Margin (%)
16.5
%
28.2
%
—
Operating Margin (%)
35.8
%
15.4
%
—
Vinyls
Net sales
U.S.$
403,930
U.S.$
153,864
—
Cost of sales
(289,500
)
(106,602
)
—
Gross profit
114,430
47,262
—
Operating income
18,739
23,574
—
Gross Margin (%)
28.3
%
30.7
%
—
Operating Margin (%)
4.6
%
15.3
%
—
Business Development
Net sales
U.S.$
92,506
U.S.$
28,368
—
Cost of sales
(77,869
)
(23,952
)
—
Gross profit
14,637
4,417
—
Operating income
5,721
3,208
—
Gross Margin (%)
15.8
%
15.6
%
—
Operating Margin (%)
6.2
%
11.3
%
—
Year Ended December 31, 2002 Compared with Year Ended December 31, 2001
Consolidated Results
Net
Sales.
Net sales of the Company increased by 34.9% during fiscal year
2002 to U.S.$2,391.1 million as compared to U.S.$1,771.9 million in fiscal year
2001, primarily as a result of the inclusion of the net sales of the
Polyolefins, Vinyls and Business Development Units following the date of the
Nova Camaçari Acquisition. See " —Results of Operation." In addition, net
sales for the Basic Petrochemicals segment, which represents the only business
segment included in the historical financial results for the full years of 2002
and 2001, decreased by 15.3% to U.S.$1,127.1 million in 2002 from U.S.$1,331.0
million in 2001.
Cost of Sales and Gross Profit.
Cost of sales increased by 31.4% during
fiscal year 2002 to U.S.$1,901.0 million as compared to U.S.$1,447.2 million
during fiscal year 2001, primarily as a result of the inclusion of the cost of
sales of the Polyolefins, Vinyls and Business Development Units following the
date of the Nova Camaçari Acquisition. See " —Results of Operation." In
addition, cost of sales for the Basic Petrochemicals segment, which represents
the only business segment included in the historical financial results for the
full years of 2002 and 2001, decreased by 13.9% to U.S.$972.5 million in 2002
from U.S.$1,129.8 million in 2001.
As a result, gross profit increased by 51% in fiscal year 2002 to
U.S.$490.1 million from U.S.$324.7 million in fiscal year 2001. Gross margin
for 2002 was 20.5% as compared to 18.3% in 2001.
Selling, General and Administrative Expenses.
Selling, general and
administrative expenses increased by 213.3% during fiscal year 2002 to
U.S.$252.5 million as compared to U.S.$80.6 million during fiscal year 2001,
primarily as a result of the inclusion of the selling, general and
administrative expenses of the Polyolefins, Vinyls and Business Development
Units following the date of the Nova Camaçari Acquisition. See " —Results of
Operation." Selling, general and administrative expenses represented 10.6%
of net sales during 2002 and 4.6% of net sales during 2001.
Credit from Federal Excise Tax (IPI).
Credit from Federal Excise Tax
(IPI) was U.S.$284.5 million in 2002, the year in which this credit was
recognized. See " —Effect of Taxes on the Company's Income —Other Taxes
—Federal excise tax (IPI)" and Note 5 to the Consolidated Financial
Statements.
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Operating Income.
Operating income increased by 114% during fiscal year
2002 to U.S.$522.2 million as compared to U.S.$244.1 million during fiscal year
2001, primarily as a result of the Credit from Federal Excise Tax (IPI)
recognized in 2002 in the aggregate amount of U.S.$284.5 million and the
inclusion of the gross profit of the Polyolefins, Vinyls and Business
Development Units following the date of the Nova Camaçari Acquisition
.
In
addition, operating income for the Basic Petrochemicals segment decreased by
36.3% to U.S.$84.3 million during 2002 as compared with U.S.$132.3 million in
2001. Operating income represented 21.8% of net sales during 2002 and 13.8% of
net sales during 2001.
Financial Income.
Financial income increased by 108.8% during fiscal year
2002 to U.S.$167.9 million as compared to U.S.$80.4 million during fiscal year
2001, primarily as a result of the inclusion of the financial income of the
Polyolefins, Vinyls and Business Development Units following the date of the
Nova Camaçari Acquisition.
Financial
Expenses.
Financial expenses increased by 293.7% during fiscal
year 2002 to U.S.$1,159.8 million as compared to U.S.$294.6 million during
fiscal year 2001, primarily as a result of the inclusion of the financial
expenses of the Polyolefins, Vinyls and Business Development Units following the
date of the Nova Camaçari Acquisition.
Other Non-operating Expenses.
Other operating expenses increased by
117.9% during fiscal year 2002 to U.S.$57.3 million as compared to U.S.$26.3
million during fiscal year 2001. This increase was primarily as a result of
the write-off by the Company of certain obsolete assets in 2002.
Income Tax (Expense) Benefit.
Income tax (expense) benefit was an expense
of U.S.$20.4 million during fiscal year 2002 as compared to a benefit of
U.S.$14.3 million during fiscal year 2001. This change was primarily as a
result of the inclusion of the financial income of the Polyolefins, Vinyls and
Business Development Units following the date of the Nova Camaçari Acquisition.
Equity in Earnings (Losses) of Affiliates, net.
Equity in earnings
(losses) of affiliates, net was a gain of U.S.$22.5 million during fiscal year
2002 as compared to a loss of U.S.$6.1 million during fiscal year 2001. This
change was primarily as a result of caused by (1) an increase of approximately
U.S.$6.4 million in the equity in earnings of Copesul in 2002 as compared to
2001 and (2) equity in earnings of Politeno in an amount of U.S.$13.0 million
in 2002 as compared to equity in losses of Politeno in an amount of U.S.$8.2
million in 2001.
Minority Interest.
Minority interest was a gain of U.S.$65.0 million
during fiscal year 2002 as compared to a loss of U.S.$63.8 million during
fiscal year 2001. The gain recorded in 2002 offset the proportion of the
losses sustained by Trikem during that year (approximately U.S.$130.0 million)
that are attributable to the interests in Trikem held by Trikem's minority
shareholders. In addition, the gain in 2002 was partially offset by a loss in
minority interest corresponding to the proportion of income earned by Polialden
during 2002 that is attributable to the interests in Polialden held by its
minority shareholders. In 2001, both Trikem and Polialden recorded net income,
a proportion of which was offset by the Company to reflect the proportional
interests of the minority shareholders in these companies.
Net Loss.
Net loss increased by 816.3% during fiscal year 2002 to
U.S.$460.0 million, or 19.2% of net sales, as compared to U.S.$50.2 million, or
2.8% of net sales, during fiscal year 2001.
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Business Segment Results
Basic Petrochemicals
The financial information with respect to the Basic Petrochemicals segment
is derived from the financial statements of the Company for the years ended
December 31, 2002 and 2001. In accordance with SFAS 131, the segment data
included in the Company's financial statements is presented under the Brazilian
Corporate Law accounting principles.
Net Sales.
Net sales of the Basic Petrochemicals segment decreased by
15.3% during 2002 to U.S.$1,127.1 million from U.S.$1,331.0 million during
2001. This decrease is primarily attributable to a decrease of 6.6% in
ethylene sales volume resulting from the stoppage of the pyrolysis plant that
is part of Olefins Unit 1 for 92 days during 2002 and the 14.1% decrease in
average ethylene prices, to U.S.$414.80 per ton in 2002 from U.S.$483.10 per
ton in 2001. Sales of Utilities accounted for 9.5% of net revenue of the Basic
Petrochemicals Unit in 2002, totaling U.S.$106.8 million, of which U.S.$59.7
million was attributable to sales of steam, U.S.$38.1 million was attributable
to sales of electricity and U.S.$8.9 million was attributable to sales of water
and compressed air, a 10.3% decrease as compared to 2001.
Net revenues of the Basic Petrochemicals segment from export sales
increased by 5.4% during 2002 to U.S.$127.0 million from
U.S.$121.0 million in
2001. Exports of gasoline, initiated by the Basic Petrochemicals segment in
2002, amounted to U.S.$27.7 million and contributed strongly to this improved
export performance.
Sales volume of ethylene decreased by 6.6% to 994.8 thousand tons in 2002
as compared to 1,064.8 thousand tons in 2001, principally due to a scheduled
stoppage of the Pyrolysis I Plant. Average prices for ethylene decreased by
14.1% to U.S.$414.8 per ton in 2002 from U.S.$483.1 per ton in 2001.
Annual sales volume of propylene decreased by 5.7% in 2002, to 463.5
thousand tons from 491.7 thousand tons in 2001. Average domestic prices for
propylene remained relatively stable in 2002, including a modest increase of
0.6% to U.S.$354.5 per ton in 2002 as compared with U.S.$352.5 per ton in 2001,
principally due to higher demand for this product during 2002.
Cost of Sales and Gross Profit.
In 2002, total cost of sales of the
Basic Petrochemicals segment decreased by 13.9% to U.S.$972.5 million from
U.S.$1,129.8 million in 2001. This decrease is primarily attributable to the
lower sales volume registered in 2002, as well as to the decrease of 4.3% in
the average annual price of naphtha purchased by the Company during 2002, as
compared with 2001. Naphtha accounted for approximately 83% and 75% of the
Basic Petrochemicals segment's cost of sales in 2002 and 2001, respectively.
Gross
profit of the Basic Petrochemicals segment decreased by 23.2% to
U.S.$154.6 million in 2002 from U.S.$201.2 million in 2001, thus resulting in a
reduced gross margin for 2002 of 13.7%, when compared with a gross margin of
15.1% for 2001.
Operating Income.
The operating income of the Basic Petrochemicals
segment decreased by 36.1% to U.S.$84.3 million during 2002 as compared with
U.S.$132.3 million in 2001. The Basic Petrochemical's operating margin for
2002 was 7.5%, as compared with 9.9% in 2001, principally as a result of the
decline in gross margins referred to above, coupled with the increase of 1.6%
in general and administrative expenses due to certain non-recurring expenses
incurred in 2002 and associated with the integration and restructuring process
that resulted in the formation of the Company. See "Item 4. Information on the
Company—History and Development of the Company."
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Polyolefins
The financial information with respect to the Polyolefins segment is
derived from the financial statements of the Company for the years ended
December 31, 2002 and 2001. As a result of the common control exercised by the
Odebrecht Group over the Company and OPP Química prior to the OPP Produtos
Merger, in accordance with U.S. GAAP, the Company accounted for the acquisition
of OPP Produtos, including its subsidiary OPP Química, in a manner similar to a
pooling-of-interests as if this acquisition had occurred on July 25, 2001, the
date of the Nova Camaçari Acquisition and the date on which such common control
had commenced. In accordance with SFAS 131, the segment data included in the
Company's financial statements is presented under the Brazilian Corporate Law
accounting principles. The financial information with respect to OPP Química
and Polialden are based on financial statements of OPP Química and Polialden
for the years ended December 31, 2002 and 2001 prepared in accordance with
accounting principles determined by the Brazilian Corporate Law.
Net
Sales.
Net sales of the Polyolefins segment increased by 155.9% during
2002 to U.S.$873.7 million from U.S.$341.4 million during 2001. This increase
was primarily attributable to the effects of the OPP Produtos Merger, which
resulted in an increase of 155.4% in the sales volume of polyethylene and an
increase of 159.5% in the sales volume of polypropylene during 2002, when
compared with 2001. In addition, the aforementioned sales volume increases
more than offset the decreases of 9% and 3% in the average prices of
polyethylene and polypropylene, respectively, during 2002, when compared with
2001. Net export sales of the Polyolefins segment increased by 242.0% during
2002 to U.S.$260.7 million from U.S.$76.2 million during 2001. This increase
is primarily attributable to the effects of the OPP Produtos Merger, which
resulted in an increase of 151.2% in the export volumes of polyethylene and
polypropylene.
Net revenues of OPP Química and Polialden, the companies that comprise
Braskem's Polyolefins segment, on a combined basis increased by 3.1% during 2002
to U.S.$873.7 million from U.S.$847.3 million during 2001. This increase was
primarily attributable to the increase of 54.4% in combined gross export sales
of the Polyolefins Unit, of OPP Química and Polialden, to U.S.$260.7 million in
2002 from U.S.$168.8 million during 2001. This increase is primarily
attributable to a 51% increase in LLDPE export sales volumes — from 43.4
thousand tons in 2001 to 65.6 thousand tons in 2002 – as well as to higher
export sales of UTEC in 2002, which amounted to U.S.$16.7 million in comparison
to U.S.$6.3 million in 2001.
Sales volume of polyethylene by OPP Química and Polialden on a combined
basis increased by 5% to 660.0 thousand tons in 2002 as compared to 628.5
thousand tons in 2001, principally due to a 24.1% increase in export volumes in
2002 as compared with 2001 (to 168.3 thousand tons in 2002 from 135.8 thousand
tons in 2001). This performance reflected a combination of factors,
including
securitization commitments and an improvement in international market demand
for this product. Average domestic prices for polyethylene decreased by 15.2%
to U.S.$704.3 per ton in 2002 as compared to U.S.$830.9 per ton in 2001,
following the trend in international market prices for polyethylene in 2002.
Sales volume of polypropylene by OPP Química and Polialden on a combined
basis increased by 9% to 411.4 thousand tons in 2002 as compared to 376.8
thousand tons in 2001, reflecting improved demand for thermoplastic
resins in
2002. Average domestic prices for polypropylene decreased by 14.2% to
U.S.$675.0 per ton in 2002 as compared to U.S.$787.0 per ton in 2001, following
the trend in international market prices for polypropylene in 2002.
Cost
of Sales and Gross Profit.
Cost of sales of the Polyolefins segment
increased by 197.4% during 2002 to U.S.$729.4 million from U.S.$245.2 million
during 2001. This increase was primarily attributable to the effects of the
OPP Produtos Merger. Purchases by the Polyolefins segment of raw materials from
the Basic Petrochemicals segment increased by 135.8% in 2002 to U.S.$156.5
million from U.S.$66.4 million in 2001.
Gross
profit of the Polyolefins segment increased by 50.3% to U.S.$144.4
million in 2002 from U.S.$96.1 million in 2001, mainly due to the effects of
the OPP Produtos Merger. Gross margin for the Polyolefins segment was 16.5% in
2002 and 28.2% in 2001, due mainly to the aforementioned decrease in the
average domestic prices of polyethylene and polypropylene in 2002 compared to
2001.
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Cost of sales of OPP Química and Polialden on a combined basis increased
by 9.2% during 2002 to U.S.$729.4 million from U.S.$668.2 million during 2001.
This increase was primarily attributable to an increase of 6.4% in sales volume
of both polyethylene and polypropylene in 2002 in comparison with 2001, as well
as from increases in plant insurance expenses incurred in 2002. Purchases of
raw materials from the Company by OPP Química and Polialden decreased by 2% in
2002 to U.S.$155.3 million from U.S.$158.4 million in 2001.
Gross profit of OPP Química and Polialden on a combined basis decreased by
19.4% to U.S.$144.4 million in 2002 from U.S.$179.1 million in 2001, thus
resulting in a gross margin for 2002 of 16.5% and 21.1% in 2001, and reflecting
the aforementioned impacts on the cost of sales.
The
operating income of the Polyolefins segment increased by 494.5% to
U.S.$312.7 million during 2002 as compared to U.S.$52.6 million in 2001, due
mainly to the effects of the OPP Produtos Merger and the recognition in 2002 by
OPP of the U.S.$284.5 million IPI tax credit (see " —Effect of Taxes on the
Company's Income—Other Taxes—
Federal excise tax (IPI)
" and Note 5
to the Consolidated Financial Statements). The operating margin for the
segment in 2002 was 35.8% as compared to 15.4% in 2001, due mainly to the
aforementioned IPI tax credit booked in 2002.
The operating income of OPP Química and Polialden on a combined basis
increased by 302.3% to U.S.$312.7 million during 2002 as compared with
U.S.$77.7 million in 2001. Operating margin for 2002 was 35.8% as compared
with 9.1% in 2001, principally due to the following:
•
the positive impact as a result of the recognition in 2002 by OPP
of the U.S.$284.5 million IPI tax credit (see " —Effect of Taxes on
the Company's Income—Other Taxes—
Federal excise tax (IPI)
"
and Note 5 to the Consolidated Financial Statements); and
•
the negative impact of a U.S.$19.4 million increase (or 74%) in
amortization expenses, from U.S.$26.2 million in 2001 to U.S.$45.6
million in 2002, due mainly to the full amortization of the deferred
exchange rate variance of 2001, which amounted to U.S.$34.9 million in
2002 in comparison to U.S.$13.9 million in 2001. The original
deferral of the exchange rate variance in 2001 had been recorded only
in the Brazilian Corporate Law financial statements and not in the
U.S. GAAP financial statements.
Vinyls
The financial information with respect to the Vinyls segment is derived
from the financial statements of the Company for the years ended December 31,
2002 and 2001. As a result of the common control exercised by the Odebrecht
Group over the Company and Trikem prior to the OPP Produtos Merger, in
accordance with U.S. GAAP, the Company accounted for the acquisition of OPP
Produtos, including its subsidiary Trikem, in a manner similar to a
pooling-of-interests as if this acquisition had occurred on July 25, 2001, the
date of the Nova Camaçari Acquisition and the date on which such common control
had commenced. In accordance with SFAS 131, the segment data included in the
Company's financial statements is presented under the Brazilian Corporate Law
accounting principles. The financial information with respect to Trikem is
based on financial statements of Trikem for the years ended December 31, 2002
and 2001 prepared in accordance with accounting principles determined by the
Brazilian Corporate Law.
Net Sales.
Net sales of the Vinyls segment increased by 162.4% during
2002 to U.S.$403.9 million from U.S.$153.9 million during 2001. This increase
was primarily attributable to the effects of the OPP Produtos Merger, which
resulted in significant increases in the Vinyls' segment's main products, PVC
(171.3%) and caustic soda (153.2%). In addition, these sales volume increases
more than offset the decrease of 39% in average caustic soda prices during
2002. Net revenues of the Vinyls segment from export sales increased by 297.9%
during 2002 to U.S.$59.5 million from U.S.$14.2 million during 2001. This
increase is primarily attributable to the effects of the OPP Produtos Merger,
which resulted in significant increases in volumes of exports by the Vinyls'
segment's main products, EDC (504.7%) and PVC (124.7%).
Net sales of Trikem, the Company's subsidiary that comprises the Vinyls
segment, decreased by 5.8% during 2002 to U.S.$403.9 million from U.S.$428.6
million during 2001. This reduction was primarily attributable to the decrease
during 2002, when compared with 2001, of 5.4% in average domestic prices for
PVC and 48.3% in average domestic prices for caustic soda. Gross export sales
of Trikem, net of discounts, returns and allowances, increased by 44.1% during
2002 to U.S.$59.5 million from U.S.$41.3 million during 2001. This improved
performance was primarily attributable to an increase of export sales of EDC,
in an aggregate amount of U.S.$20.5 million in 2002, an increase of 173.3%
compared to 2001. This increase also reflected the increase in 2002, when
compared to 2001, of 135.6% in average EDC prices.
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Trikem's total sales volume of PVC increased by 8.8% to 379.3 thousand
tons in 2002 compared to 348.6 thousand tons in 2001, principally due to a 7.5%
increase in domestic sales volumes, which reflected improving domestic demand
for PVC in 2002. Average domestic prices for PVC decreased by 5.4% to
U.S.$677.8 per ton in 2002 as compared to U.S.$716.5 per ton in 2001, following
the trend in international market prices for PVC in 2002.
Trikem's volume of caustic soda sales increased by 11.8% to 400.8 thousand
tons in 2002 as compared to 358.7 thousand tons in 2001, principally due to
higher domestic demand for caustic soda stemming from the termination, in
February 2002, of the Brazilian government's electric energy rationing program
initiated in June 2001. Average domestic prices for caustic soda decreased by
48.3% to U.S.$190.7 per ton in 2002 as compared with U.S.$368.9 per ton in
2001, following the trend in international market prices for caustic soda in
2002.
Cost of Sales and Gross Profit.
Cost of sales of the Vinyls segment
increased by 171.6% during 2002 to U.S.$289.5 million from U.S.$106.6 million
during 2001. This increase was primarily attributable to the effects of the
OPP Produtos Merger.
Gross profit of the Vinyls segment increased by 141.9% to U.S.$114.4
million in 2002 from U.S.$47.3 million in 2001, resulting in a gross margin for
2002 of 28.3% and of 30.7% in 2001.
Cost of sales of Trikem increased by 3.2% during 2002 to U.S.$289.5
million from U.S.$280.6 million during 2001. This increase was primarily
attributable to the 6.1% higher sales volume of the segment's main products
(PVC, caustic soda and EDC), as well as to higher plant insurance expenses
booked in the period. Purchases by Trikem of raw materials from the Company
decreased by 6.2% in 2002 to U.S.$120.8 million from U.S.$128.8 million in
2001.
Gross profit of Trikem decreased by 22.7% to U.S.$114.4 million in 2002
from U.S.$148.0 million in 2001, resulting in a gross margin for 2002 of 28.3%,
as compared with 34.5% in 2001 which reflects the impacts of the 8.4% decrease
in net sales and the 3.2% increase in cost of sales.
Operating Income.
The operating income of the Vinyls segment declined by
20.8% to U.S.$18.7 million during 2002 as compared to U.S.$23.6 million in
2001. The operating margin for 2002 was 4.6% as compared to 15.3% in 2001.
This reduction was primarily attributable to: (1) additional U.S.$46.7 million
in expenses in 2002 associated with the full amortization of the deferred
exchange rate valiance in 2001; (2) certain non-recurring expenses incurred in
2002 and associated with the integration and restructuring process that
resulted in the formation of the Company; see "Item 4. Information on the
Company—History and Development of the Company"; and (3) the variations
discussed above (net sales and cost of sales).
Trikem's operating income declined by 81% to U.S.$18.7 million during 2002
as compared with U.S.$98.6 million in 2001. Trikem's operating margin for 2002
was 4.6% as compared with 23% in 2001, principally as a result of: (1)
an additional U.S.$46.7 million in expenses in 2002 associated with the full
amortization of the deferred exchange rate valiance in 2001 (such expenses
amounted to U.S.$13.1 million in 2001); (2) certain non-recurring expenses
incurred in 2002 and associated with the integration and restructuring process
that resulted in the formation of the Company; see "Item 4. Information on the
Company—History and Development of the Company"; and
(3) the variations
discussed above (net sales and cost of sales). The original deferral
of the exchange rate variance in 2001 had been recorded only in the
Brazilian Corporate Law financial statements and not in the U.S. GAAP
financial statements.
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Business Development
The financial information with respect to the Business Development segment
is derived from the financial statements of the Company for the years ended
December 31, 2002 and 2001. In accordance with SFAS 131, the segment data
included in the Company's financial statements is presented under the Brazilian
Corporate Law accounting principles. The financial information with respect to
Nitrocarbono is based on financial records of Nitrocarbono for the four months
ended December 31, 2002 and financial information with respect to the
operations of the business of Proppet is based on the financial records of the
Company. The Business Development Unit of the Company is responsible for
managing certain of the Company's minority investments, principally its
investments in Petroflex and Cetrel. However, as the results of the Company's
investments managed by the Business Development Unit are reported as equity in
earnings (losses) of affiliates, the results of these companies are not
included in the segment discussions included below.
Net Revenue.
Net revenue of the Business Development segment increased by
225.7% during 2002 to U.S.$92.5 million from U.S.$28.4 million during 2001.
This increase was primarily attributable to the effects of the Nova Camaçari
Acquisition, coupled with the 52114 Merger, which collectively resulted in a
154.5% increase in the sales volume of PET to 61.3 thousand tons in 2002 as
compared with 24.1 thousand tons in 2001, as well as to the inclusion of the
sales volume of caprolactam of 40.9 thousand tons in the sales of the Business
Development segment's for the last four months of 2002. Net revenue of the
Business Development segment from export sales was
U.S.$6.0 million during 2002.  There were no exports during 2001.
Net sales of Nitrocarbono and Proppet, the companies that comprise the
Business Development segment, on a combined basis, increased by 44.8% during
2002 to U.S.$92.5 million from U.S.$63.9 million during 2001. This increase
was primarily attributable to: (1) an increase during 2002 of 12.9% in PET
sales volume; (2) an increase during 2002 of 27.2% in DMT sales volume; and (3)
the inclusion of net sales of caprolactam by Nitrocarbono of U.S.$20.1 million
in the last four months of 2002. Gross export sales, net of discounts, returns
and allowances, increased by U.S.$5.9 million during 2002 to U.S.$6.0 million
during 2001. This increase is primarily attributable to the effects of the
52114 Merger which included net sales of Nitrocarbono for the last
four months of 2002.
Sales volume of PET by Proppet increased by 12.9% to 59.8 thousand tons in
2002 as compared to 53.0 thousand tons in 2001, principally due to operating
improvements realized during 2002 which permitted the Company's PET production
facility to increase its level of production. Average domestic prices for PET
decreased by 16.7% to U.S.$907.0 per ton in 2002 as compared to U.S.$1,090.0
per ton in 2001, following the trend in international market prices for PET in
2002.
Sales volume of caprolactam by Nitrocarbono were 15.1 thousand tons in
2002, and the average domestic price for this product during 2002 was
U.S.$1,332.0 per ton.
Cost of Sales and Gross Profit.
Cost of sales of the Business
Development segment increased by 224.6% during 2002 to U.S.$77.9 million from
U.S.$24.0 million during 2001, reflecting the effects of the 52114 Merger. The
Business Development segment purchased U.S.$15.1 million of raw materials from
the Basic Petrochemicals segment in 2002.
Gross profit of the Business Development segment increased by 231.8% to
U.S.$14.6 million in 2002 from U.S.$4.4 million in 2001, resulting in a gross
margin for 2002 of 15.8% as compared to 15.6% in 2001.
Cost of sales of Nitrocarbono and Proppet on a combined basis increased by
38.3% during 2002 to U.S.$77.9 million from U.S.$56.3 million during 2001.
This increase was primarily attributable to: (1) an increase during 2002 of
12.9% in PET sales volume; (2) an increase of 27.2% during 2002 in DMT sales
volume; and (3) net sales by Nitrocarbono of caprolactam of U.S.$20.1 million
during the last four months of 2002, which corresponded to 38.6% of the
combined net sales of Nitrocarbono and Proppet. Purchases of raw materials
from the Company by Nitrocarbono and Proppet on a combined basis increased by
5% in 2002 to U.S.$25.0 million from U.S.$23.8 million in 2001.
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Gross profit of Nitrocarbono and Proppet on a combined basis increased by
91.3% to U.S.$14.6 million in 2002 from U.S.$7.6 million in 2001, thus
resulting in a gross margin for 2002 of 15.8% as compared with 12% in 2001.
Operating Income (Loss).
The operating income of the Business Development
segment increased by 78.1% to U.S.$5.7 million during 2002 as compared to
U.S.$3.2 million in 2001. Operating margin for 2002 was 6.2% as compared to
11.3% in 2001, principally as a result of the effects of the 52114 Merger.
The operating income of Nitrocarbono and Proppet on a combined basis
increased by 7.5% to U.S.$5.7 million during 2002 as compared with U.S.$5.3
million in 2001. Operating margin during 2002 was 6.2% as compared with 8.3%
during 2001, principally because the 52114 Merger included four months
of Nitrocarbono's operations in its 2002 results, thus representing additional selling, general and
administrative expenses of U.S.$3.6 million in 2002.
Year Ended December 31, 2001 Compared with Year Ended December 31, 2000
Consolidated Results
Net Sales.
Net sales of the Company increased by 13.9% during fiscal year
2001 to U.S.$1,771.9 million as compared to U.S.$1,555.1 million in fiscal year
2000, primarily as a result of the inclusion of the net sales of the
Polyolefins, Vinyls and Business Development Units. In addition, revenues for
the Basic Petrochemicals segment, which represents the only business segment
included in the historical financial results for the full years 2001 and 2000,
decreased by 15.2% to U.S.$1,331.0 million in 2001 from U.S.$1,568.7 million in
2000.
Cost of Sales and Gross Profit.
Cost of sales increased by 15.6% during
fiscal year 2001 to U.S.$1,447.2 million as compared to U.S.$1,252.4 million
during fiscal year 2000, primarily as a result of the inclusion of the cost of
sales of the Polyolefins, Vinyls and Business Development Units. In addition,
cost of sales and services for the Basic Petrochemicals segment decreased by
9.8% to U.S.$1,129.8 million in 2001 from U.S.$1,252.4 million in 2000.
As a result, gross profit increased by 7.3% in fiscal year 2001 to
U.S.$324.7 million from U.S.$302.7 million in fiscal year 2000. Gross margin
for 2001 was 18.3% as compared to 19.5% in 2000.
Selling,
General and Administrative Expenses.
Selling, general and
administrative expenses increased by 4.7% during selling, fiscal year 2001 to U.S.$80.6
million as compared to U.S.$77.0 million during fiscal year 2000, primarily as
a result of the inclusion of the selling, general and administrative expenses of the
Polyolefins, Vinyls and Business Development Units.
Operating Income.
Operating income increased by 8.1% during fiscal year
2001 to U.S.$244.1 million as compared to U.S.$225.7 million during fiscal year
2000, primarily as a result of the inclusion of the operating income of the
Polyolefins, Vinyls and Business Development Units. In addition, operating
income for the Basic Petrochemicals segment decreased by 41.4% to U.S.$132.3
million in 2001 from U.S.$225.7 million in 2000. Operating income represented
13.8% of net revenue during 2001 and 14.5% of net revenue during 2000.
Financial
Income.
Financial income decreased by 15.3% during fiscal year
2001 to U.S.$80.4 million as compared to U.S.$94.9 million during fiscal year
2000, primarily as a result of a decrease in 2001 of (1) average cash equivalents and
time deposits and (2) domestic interest rates.
Financial
Expenses.
Financial expenses increased by 119.9% during fiscal
year 2001 to U.S.$294.6 million as compared to U.S.$134.0 million during fiscal
year 2000. This increase was primarily as a result of additional indebtedness
incurred in connection with the Auction, as well as the inclusion of the
indebtedness of the Polyolefins, Vinyls and Business Development Units.
As of
December 31, 2001, the Company had outstanding contracts for
risk management purposes in the notional amount of U.S.$226.2 million. The Company recognized
net gains of U.S.$6.2 million on these contracts in 2001.
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Other Non-operating Expense.
Other non-operating expense increased by
952% during fiscal year 2001 to U.S.$26.3 million as compared to U.S.$2.5
million during fiscal year 2001. This increase was primarily as a result of
the inclusion of other non-operating expenses of the Polyolefins, Vinyls
and Business Development Units.
Income Tax (Expense) Benefit.
In 2001, the Company recorded an income tax
benefit of U.S.$14.3 million related to the recognition of a deferred income tax
asset in respect of the tax loss incurred in that year and tax effects of the change in
the net asset basis between U.S. GAAP and the Brazilian tax treatment.
In 2000, the Company recorded an income tax expense of U.S.$2.9 million
due to the tax effects of the change in the net asset basis between U.S. GAAP and
the Brazilian tax treatment.
Equity in Earnings (Losses) of Affiliates, Net.
Equity in earnings
(losses) of affiliates, net was a loss of U.S.$6.1 million during fiscal year
2001 as compared to a gain of U.S.$6.9 million during fiscal year 2000. This
change was primarily as a result of (1) equity in losses of Politeno in an
amount of U.S.$8.2 million in 2001 and (2) equity in earnings of Norcell in an
amount of U.S.$9.8 million in 2000.
Minority Interest.
Minority interest was a loss of U.S.$63.8 million
during fiscal year 2001 as compared to a gain of U.S.$15 thousand during fiscal
year 2001. This change was primarily as a result of the effects of the Nova
Camaçari Acquisition.
Net Income (Loss).
Net loss was U.S.$50.2 million, or 2.8% of net sales,
during fiscal year 2001 as compared to net income of U.S.$188.0 million, or
12.1% of net sales, during fiscal year 2000.
Business Segment Results
Basic Petrochemicals
The financial information with respect to the Basic Petrochemicals segment
is derived from the financial statements of the Company for the years ended
December 31, 2001 and 2000. In accordance with SFAS 131, the segment data
included in the Company's financial statements is presented under the Brazilian
Corporate Law accounting principles.
Net Revenue.
Net revenue of the Basic Petrochemicals segment decreased by
15.2% during 2001 to U.S.$1,331.0 million from U.S.$1,568.7 million during
2000. This decrease is primarily attributable to the reduction of 3.5% in the
sales volume of ethylene, from 1,103,800 tons in 2000 to 1,064,800 tons in
2001, as well as to the decrease of 15.1% in domestic prices of ethylene, from
U.S.$569 per ton in 2000 to U.S.$483 per ton in 2001. Sales of Utilities
accounted for 8.9% of net revenues of the Basic Petrochemicals segment in 2001,
totaling U.S.$119.0 million, representing a 4% decrease when compared with
2000. Of these aggregate sales in 2001, U.S.$58.9 million was attributable to
sales of steam, U.S.$50.7 million was attributable to sales of electricity and
U.S.$9.3 million was attributable to sales of water and compressed air.
Net revenue of the Basic Petrochemicals segment from export sales
decreased by 25.2% during 2001 to U.S.$121.1 million from U.S.$167.7 million
during 2000. This decrease is primarily attributable to the decline of
international prices for petrochemical products in 2001.
Sales volume of ethylene decreased by 3.5% to 1,064,800 tons in 2001 as
compared to 1,103,800 tons in 2000, principally due to the programmed
maintenance shutdown for 27 days in August 2001 of one of the production
facilities for olefins. Average prices for ethylene decreased by 15.1% to
U.S.$483.0 per ton in 2001 as compared to U.S.$569.0 per ton in 2000, following
the trend in international market prices for petrochemical products in 2001.
Sales volume of propylene decreased by 7.8% to 491,700 tons in 2001 as
compared to 533,500 tons in 2000, principally due to the programmed maintenance
shutdown for a period of 27 days in August 2001 of one of the production
facilities for olefins. Average domestic prices for propylene decreased by
24.1% to U.S.$352 per ton in 2001 as compared with U.S.$464 per ton in 2000, following the trend in
international market prices for petrochemical products in 2001.
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Cost of Sales and Gross Profit.
Total cost of sales of the Basic
Petrochemicals segment decreased by 9.8% during 2001 to U.S.$1,129.8 million
from U.S.$1,252.3 million during 2000. This decrease is primarily attributable
to the lower volume of petrochemicals sold in 2001 in view of the
aforementioned maintenance shutdown, as well as to the decrease of 8.3% in
average naphtha prices in 2001 compared to 2000.
Gross profit of the Basic Petrochemicals segment decreased by 36.4% to
U.S.$201.2 million in 2001 from U.S.$316.4 million in 2000, thus resulting in a
gross margin for 2001 of 15.1% and of 20.2% for 2000.
Operating Income.
Operating income of the Basic Petrochemicals segment
decreased by 39.4% to U.S.$132.3 million during 2001 as compared with
U.S.$218.3 million in 2000. Operating margin for 2001 was 9.9% as compared to
13.9% in 2000, principally as a result of the decline in the gross margin of
this segment, which decline was partially offset by a U.S.$14.3 million charge
for the settlement of VAT claims that was incurred in 2000 that did not have a
corresponding charge in 2001.
Polyolefins
The
Company's Polyolefins segment was acquired in the OPP Produtos Merger.
As such, the results of operations of this segment were not included in the
historical 2000 results of operations, and therefore, the increases in this
segment's operating results are the direct result of the OPP Produtos Merger
and the Nova Camaçari Acquisition.
Vinyls
The Company's Vinyls segment was acquired in the OPP Produtos Merger. As
such, the results of operations of this segment were not included in the
historical 2000 results of operations, and therefore, the increases in this
segment's operating results are the direct result of the OPP Produtos Merger.
Business Development
The Company's Business Development segment was acquired in the Nova
Camaçari Acquisition and the 52114 Merger. As such, the results
of operations for this segment were not included in the historical
2000 results of operations,
and therefore, the increases in this segment's operating results are the
direct result of the Nova Camaçari Acquisition and the 52114 Merger.
Supplemental Unaudited Pro Forma Discussion
The pro forma information is presented for informational purposes only and
is not necessarily indicative of the results of operations of the Company that
would have occurred had the Nova Camaçari Acquisition and the Related Party
Mergers been consummated on January 1, 2001. In addition, the pro forma
operating results are not necessarily indicative of the future operating
results of the Company. Management expects that the strategic benefits of the
Related Party Mergers will result in incremental revenue and cost-savings
opportunities; however, such incremental revenues or cost savings have not been
reflected in the pro forma operating results.
Pro forma adjustments to record the Nova Camaçari Acquisition and the
Related Party Mergers as of January 1, 2001 include the following:
•
The inclusion of the results of operations of each of the companies
included in the Nova Camaçari Acquisition, as well as OPP Produtos and
its subsidiaries, for the period from January 1 to July 25, 2001, the
date of the Nova Camaçari Acquisition.
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•
An adjustment to the depreciation expense of the companies included
in the Nova Camaçari Acquisition, representing the depreciation expense
for the period from January 1 to July 25, 2001, based upon the fair value
adjustment of these companies' fixed assets recorded as part of the
purchase accounting process.
•
An adjustment to interest expense for the period from January 1 to
July 25, 2001, representing the interest expense on the loans
incurred in connection with the Nova Camaçari Acquisition, as if such
loans had been contracted on January 1, 2001.
•
Elimination of intercompany revenues and expenses involving the
companies included in the pro forma presentation.
•
Inclusion of the estimated income tax and social contribution
effects of the above adjustments.
The following table sets forth certain pro forma consolidated financial
information of the Company for the years ended December 31, 2002 and 2001,
giving effect to the Nova Camaçari Acquisition and the Combined Companies
Mergers and the Related Party Mergers as if the Nova Camaçari Acquisition and
Related Party Mergers had occurred on January 1, 2001.
Year ended December 31,
2002
2001
(in thousands of U.S. dollars, except percentages)
Net sales
U.S.$2,391,116
U.S.$2,401,450
Cost of sales
(1,900,987
)
(1,872,088
)
Gross profit
490,129
529,362
Selling, general and administrative expenses
(252,475
)
(176,675
)
Credit
from Federal Excise Tax (IPI)
284,509
—
Operating income (loss)
522,163
352,687
Financial income
167,854
173,461
Financial expenses
(1,159,842
)
(798,353
)
Other non-operating expenses, net
(57,281
)
(37,811
)
Income tax and social contribution (expense) benefit
(20,422
)
33,316
Equity in earnings (losses) of affiliates
22,467
(3,190
)
Minority interest
65,024
(42,570
)
Cumulative effect of change in accounting principle, net
—
1,767
Loss
U.S.$(460,037
)
U.S.$(320,693
)
Gross Margin (%)
20.5
22.0
Operating Margin (%)
21.8
14.7
Year Ended December 31, 2002 Compared with Year Ended December 31, 2001
Net Revenue.
Net revenue of the Company decreased by 0.4% during fiscal
year 2002 to U.S.$2,391.1 million as compared to U.S.$2,401.5 million during
fiscal year 2001 primarily as a result of the scheduled shutdown at the
pyrolysis plant of the Olefins 1 Unit of the Basic Petrochemical Unit, that was
the major cause for the 6.6% decrease in the sales volume of ethylene. In
addition, the decrease of the prices of the thermoplastic resins and
basic petrochemicals products in the domestic market in 2002, in line with the
decrease in international prices, more than offset the increase of 7% in
the sales volume of thermoplastic resins. Export sales represented 22.4% of
total net revenue in 2002.
Costs of Sales and Services and Gross Profit.
Cost of sales and services
increased by 1.5% during fiscal year 2002 to U.S.$1,901.0 million as compared
to U.S.$1,872.1 million during 2001. Although naphtha and ethylene prices paid
by Braskem decreased in 2002 when compared to 2001, the increase in fixed costs
due to the aforementioned scheduled shutdown of the Basic Petrochemicals Unit and an
increase in the insurance costs for the Company's industrial facilities more
than offset the decrease in naphtha and ethylene prices, the main raw materials
of the Company.
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As a result of the items discussed above, on a pro forma basis, gross
profit decreased by 7.4% in fiscal year 2002 to U.S.$490.1 million from
U.S.$529.4 million in fiscal year 2001. Gross margin for 2002 was 20.5% as
compared to 22% in 2001.
Selling, General and Administrative Expenses.
Selling, general and
administrative expenses increased by 42.9% during fiscal year 2002 to U.S.$252.5
million as compared to U.S.$176.7 million in fiscal year 2001. This increase
was mainly caused by the impact of non-recurring expenses related to the
Company's corporate restructuring process in 2002. Selling, general and administrative expenses
represented 10.6% of the Company's net revenue in 2002 and 7.4% of the
Company's net revenue in 2001.
Credit from Federal Excise Tax (IPI).
The Company recorded revenues of
U.S.$284.5 million in 2002 relating to a credit for IPI in respect of taxes
paid for raw materials that are in a zero percent tax bracket, which amount
includes approximately U.S.$75.0 million that had already been offset against
taxes payable in prior years. In connection with the recognition of this
revenue, the Company recognized a portion of this amount in taxes recoverable, including
U.S.$67.5 million as current assets and U.S.$148.8 million as non-current
assets. See " —  Effect of Taxes on the Company's Income — Other Taxes —
Federal Excise Tax (IPI)."
Operating Income.
Operating income increased by 48.1% during fiscal year
2002 to U.S.$522.2 million as compared to U.S.$352.7 million in fiscal year
2001. The major contributor to this variation was the recognition by the
Company in 2002 of IPI tax credits in an aggregate amount of U.S.$284.5
million. Operating income represented 21.8% of net revenue during 2002 and
14.7% of net revenue during 2001.
Financial Income.
Financial income in fiscal year 2002 amounted to
U.S.$167.9 million, practically in line with U.S.$173.5 million in financial
income in fiscal year 2001. Financial income represented 7% of the Company's
net revenue during 2002 and 7.2% of the Company's net revenue during 2001.
Financial
Expenses.
Financial expenses increased by 45.3% during fiscal
year 2002 to U.S.$1,159.8 million as compared to U.S.$798.4 million in fiscal
year 2001. The increase in financial expenses was due to the higher
devaluation of the
real
in relation to the U.S. Dollar in 2002, as compared to
the devaluation that occurred in 2001 (34.3% in 2002 and 15.7% in
2001).
Other Non-operating Expense, Net.
Other non-operating expenses, net,
increased by 51.5% during fiscal year 2002 to U.S.$57.3 million as compared to
U.S.$37.8 million in fiscal year 2001. The increase in other non-operating
expenses, net, was caused primarily by the write-off by the Company of certain
obsolete assets in 2002.
Income Tax and Social Contribution.
Income tax and social contribution
was an expense in the amount of U.S.$20.4 million during fiscal year 2002 as
compared to a credit of U.S.$33.3 million in fiscal year 2001. Income tax and
social contribution was an expense in 2002 because, despite the fact that the
Company incurred a loss in 2002, its subsidiary OPP Química had taxable income
in 2002 primarily as a result of its recognition of IPI tax credits during that
year. Income tax and social contribution was a credit in 2001 due to
the recording of a deferred tax credit in respect of losses sustained by the
Company during 2001.
Equity in Earnings (Losses) of Affiliates.
Equity in earnings (losses) of
affiliates increased during fiscal year 2002 to equity in earnings of
affiliates of U.S.$22.5 million as compared to equity in losses of affiliates
of U.S.$3.2
million in fiscal year 2001. The increase in equity in earnings (losses)
of affiliates in 2002 was primarily caused by (1) an increase of approximately
U.S.$6.0 million in the equity in earnings of Copesul in 2002 as compared to
2001 and (2) equity in earnings of Politeno in an amount of U.S.$13.0 million
in 2002 as compared to equity in losses of Politeno in an amount of U.S.$8.2
million in 2001. Copesul and Politeno are among the Company's affiliates
included in equity in earnings (losses) of affiliates.
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Minority Interest.
Minority interest amounted to a gain of U.S.$65.0
million in 2002 million as compared to a loss of U.S.$42.6 million in fiscal
year 2001. The gain recorded in 2002 offset the proportion of the losses
sustained by Trikem during that year (approximately U.S.$130.0 million) that
are attributable to the interests in Trikem held by Trikem's minority
shareholders. In addition, the gain in 2002 was partially offset by a loss in
minority interest corresponding to the proportion of income earned by Polialden
during 2002 that is attributable to the interests in Polialden held by its
minority shareholders. In 2001, both Trikem and Polialden recorded net income,
a proportion of which was offset by the Company to reflect the proportional
interests of the minority shareholders in these companies.
Loss.
Loss increased by 43.5% during fiscal year 2002 to
U.S.$460.0 million as compared to a loss of U.S.$320.7 million in fiscal
year 2001. The key factors for the increase in the loss between these
two years were the 7.4% decrease in the gross profit, the 45.3% increase in the
financial expenses and the 42.9% increase in the selling, general and
administrative expenses. These factors altogether, more than offset the
non-recurring gains associated with the IPI tax credit.
Liquidity and Capital Resources
The Company's principal cash requirements consist of the following:
•
working capital needs;
•
the servicing of the Company's indebtedness;
•
capital expenditures related to investments in operations and property, plant and equipment; and
•
dividend payments on its shares.
The Company's principal sources of liquidity have traditionally consisted
of cash flows from operating activities and short-term, and long-term secured
borrowings, including pre-export financings. The Company is seeking to extend
the overall maturity of its outstanding indebtedness by refinancing certain
portions of its indebtedness that come due in the latter half of 2003 and
during 2004. The Company believes that this extension of its debt maturities
is important in order to better match the Company's cash generation capacity
with its debt service and capital expenditure obligations. The Company is also
seeking to sell certain of its non-core assets. See
"— Working Capital" and "Indebtedness and Financing Strategy — Long-term
Indebtedness — Notes."
The Company's cash and cash equivalents at December 31, 2002 and 2001 were
U.S.$35.5 million and U.S.$109.2 million. The decrease in the amount of the
Company's cash and cash equivalents at the end of 2002 compared to the end of
2001 was principally due to net cash used in financing activities, despite the
positive operating cash flow. The Company does not have any material unused
sources of liquidity.
Working Capital
The Company had consolidated negative working capital (current assets
minus current liabilities) of U.S.$594.7 million at December 31, 2002
(U.S.$610.2 million at December 31, 2001). Part of the Company's debt strategy
over the next few years involves the use of a substantial portion of its
consolidated cash flow (including from synergies resulting from the mergers
that formed part of its consolidation and from, possibly, the sale of certain
non-core assets) to pay principal and interest with respect to this
indebtedness, including by repaying short-term debt through longer-term
borrowings and issuing longer-term debt securities. Any failure by the Company
to refinance indebtedness coming due during the next 12-18 months that it does
not repay using cash flow generated from its operations and from the sale of
non-core assets would adversely affect the Company and its financial condition.
See "Item 3. Key Information — Risk Factors — Risks Relating to the Company
— The Company's indebtedness will require that a
significant portion of its
cash flow be used to pay the principal and interest with respect to that
indebtedness."
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Table of Contents
The
Company has short-term finance lines denominated in
reais
with many of
the most important banks operating in Brazil. Although the Company has no
committed lines of credit with these banks, the Company's management believes
that the Company will continue to be able to obtain sufficient credit to
finance its working capital needs.
Cash Flows
Cash flows from operating activities
Net cash from operating activities was U.S.$429.6 million in 2002 and
U.S.$124.4 million in 2001.
The Company's cash flows from operating activities in 2002 reflected an
245.3% increase over 2001, principally due to an increase in liabilities with
suppliers, other taxes and advances from customers.
Cash flow from investing activities
Investing activities, primarily including acquisitions, other capital
expenditures and investments in and loans to affiliated companies, used net
cash flow of U.S.$217.2 million in 2002 compared to using net cash flow of
U.S.$118.5 million in 2001. Cash flows used in investing activities in 2002
were mainly composed of additions to property and equipment related to
revamping and maintaining the pyrolysis plant of the Olefins Unit 1 of the
Company's Basic Petrochemicals Unit.
Cash flows used in investing activities in 2001 were mainly composed of
the investment in the Nova Camaçari Acquisition, partially offset by U.S.$147.6
million generated from cash and cash equivalents of the merged companies and
from a reduction in short-term and long-term investments.
Cash flow from financing activities
Financing activities (before distributions to shareholders), which include
short-term and long-term secured and unsecured borrowings, and debt
repayments,
used net cash flows of U.S.$191.1 million in 2002, compared to providing net
cash flows of U.S.$91.2 million in 2001.
During the year ended December 31, 2002, the Company's issuance and
repayments of debt were U.S.$1,701.3 million and U.S.$1,852.3 million,
respectively. During the year ended December 31, 2001, the Company's issuance
and repayments of debt were U.S.$1,491.6 million and U.S.$1,382.8 million,
respectively.
In 2002, the Company's principal source of long-term borrowed funds was an
issuance of unsecured convertible debentures in an aggregate amount of
U.S.$241.8 million, and an export prepayment financing in an aggregate amount
of U.S.$97.2 million. At December 31, 2002, these debentures and this export
prepayment financing had outstanding principal balances of U.S.$182.1 million
and U.S.$97.2 million, respectively. In 2001,
the Company's principal source of long term borrowed funds was (1) the
issuance by the Company of two series of secured, non-convertible debentures,
in an aggregate amount of U.S.$176.3 million and (2) an export prepayment
credit agreement in an aggregate amount equal to U.S.$300.0 million.
The Company paid cash dividends and interest attributable to shareholders'
equity (including withholding taxes paid by the Company on behalf of its
shareholders in respect thereof) of U.S.$10.7 million and U.S.$39.9 million,
respectively, for the years ended December 31, 2002 and 2001.
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Contractual Commitments
The following table summarizes significant contractual obligations and
commitments as of December 31, 2002 that impact the Company's liquidity:
Payments Due by Period (in millions of U.S. dollars)
2003
2004
2005
2006
2007
Thereafter
Total
Long-term debt, including current portion
413.0
363.5
158.5
131.3
405.2
0.3
1,471.8
Debentures
9.1
154.7
—
—
182.1
—
345.9
Purchase obligations (1)
110.4
110.4
110.4
110.4
110.4
653.8
1,205.8
Total Contractual obligations
532.5
628.6
268.9
241.7
697.7
654.1
3,023.5
(1)
Purchase commitments of raw materials and electric power based upon the
applicable purchase price as of December 31, 2002.
In addition, the Company is subject to contingencies with respect to tax,
labor, distributors, and other claims and has made provisions for accrued
liability for legal proceedings related to certain tax claims of U.S.$209.4
million at December 31, 2002. The tax contingencies relate primarily to the
Contribution for Social Security Financing, Social Integration
Program, the Federal Excise Tax (IPI), the corporate income tax and social security
contributions. See "Item 8. Financial Information — Legal Proceedings" and
Note 13 to the Consolidated Financial Statements.
Indebtedness and Financing Strategy
As of December 31, 2002, the Company's aggregate outstanding debt
(including short-term debt, current portion of long-term debt, long-term debt
and debentures) was U.S.$2,120.7 million, consisting of short-term debt,
current portion of long-term debt and current portion of debentures included in
current liabilities of U.S.$725.1 million and long-term debt and debentures
(excluding the current portion) in long-term liabilities of U.S.$1,395.6
million.
The Company's debt consisted of U.S.$706.1 million of
real
-denominated
debt and U.S.$1,414.6 million of foreign currency-denominated debt. See "Item
11. Quantitative and Qualitative Disclosures About Market Risk" for
information regarding the Company's interest rate exposure, its average
maturity and its policy with respect to mitigating foreign currency risks
through the use of financial instruments and derivatives.
The Company's cash interest expense was U.S.$274.8 million and U.S.$174.4
million for 2002 and 2001, respectively.
Short-term Indebtedness
During the last three years, the Company has instituted a policy of
attempting to reduce its short-term debt and the current portion of its
long-term debt as much as possible taking into account market conditions in
Brazil. The Company successfully reduced its short-term debt (including the
current portion of long-term debt and debentures) to U.S.$725.1 million as of
December 31, 2002, from U.S.$840.0 million as of December 31, 2001. As of
December 31, 2002, the Company's outstanding short-term debt consisted
primarily of advances on export
contracts and working capital debt with Brazilian financial institutions
and discounting of domestic trade receivables.
The Company has short-term finance lines denominated in
reais
with a
number of financial institutions operating in Brazil. Although the Company has
no committed lines of credit with these banks, the Company's management
believes that the Company will continue to be able to obtain sufficient credit
to finance its working capital needs.
Long-term Indebtedness
The Company's long-term debt consists primarily of notes issued in the
Brazilian and foreign capital markets, borrowings under credit agreements and
pre-export financings.
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Sets forth below are descriptions of certain significant financing
transactions of the Company.
Debentures
On October 1, 2001, the Company's predecessor, Copene, issued the tenth
issue of secured non-convertible debentures (the "Tenth Issue") in Brazil. The
Tenth Issue was issued in two series and is secured by a "
garantia flutuante
,"
or a floating lien over all of the Company's Basic Petrochemicals Unit's
assets. Copene used the proceeds from the debentures to refinance in part its
obligations in connection with the acquisition of the ESAE Assets in the
Auction. See "Item 4. History and Development of the Company."
At December 31, 2002, the aggregate outstanding amount of the first series
of these debentures was U.S.$100.4 million. Interest on the first series
accrues at the rate per annum of 118.3% of the
Certificado Depósito
Interbancário
(the Brazilian interbank rate, or CDI), since December 1, 2002
(110% of CDI through November 30, 2002). Interest on the first series is
payable semi-annually, and the first series matures on October 1, 2006.
At December 31, 2002, the aggregate outstanding amount of the second
series was U.S.$63.4 million. Interest on the second series accrues at a rate
of 13.3% per annum, and the principal amount is adjusted for inflation on each
payment date using the IGP-M. Interest on the second series is payable
annually, and the second series matures on October 1, 2006.
The initial interest rates described above in respect of both series of
debentures will be in effect until October 1, 2004, when the Company's Board of
Directors will establish new interest rates for the period commending on such
date through the final maturity date thereof. The Company must redeem in full
the debentures of any holders that do not accept the new interest rates
established by its Board of Directors.
The
Tenth Issue contains a number of covenants (calculated in accordance with accounting
principles determined by the Brazilian Corporate Law) including a maximum net
debt to EBITDA ratio (declining over time); a minimum EBITDA to net financial
expenses ratio (increasing over time); a maximum short-term debt to EBITDA
ratio (declining over time), which applies if the net debt to EBITDA ratio is
greater than specified levels or the maximum EBITDA to net financial expenses
ratio is less than specified levels; and limitations on dividend payments,
loans to shareholders and affiliates, asset sales, liens and mergers and
acquisitions.
On May 31, 2002, OPP Produtos Petroquímicos issued registered,
subordinated convertible debentures in Brazil. As a result of the Related
Party Mergers, these debentures became obligations of the Company. At December
31, 2002, the aggregate outstanding principal amount of these debentures was
U.S.$ 182.1 million. Interest on these debentures accrues at the
Taxa de Juros
de Longo Prazo
, or TJLP, the Brazilian National Bank for Economic and Social
Development's long-term interest rate, plus 5.0% per annum. Interest on these
debentures is fully capitalized until the maturity date of these debentures on
July 31, 2007. The terms of these debentures provide that they (1) may not be
accelerated, redeemed, prepaid, renegotiated or amended and (2) are
subordinated to the Tenth Issue and to a U.S.$250 million export pre-payment
credit agreement, which is more fully discussed in " — Export Pre-Payment
Facilities."
The holders of these debentures have the option at any time before
maturity to convert their debentures into shares of the Company's capital
stock. The initial conversion price is R$975.2 (equivalent to U.S.$276 using
the
real
/U.S. dollar exchange rate at December 31, 2002) of debentures, plus
accrued interest, per 1,000 class A preferred shares. Upon conversion, the
Company is required to issue class A preferred shares up to the legal limit for
preferred shares of 66.6% of its total capital stock. After this 66.6% limit is
reached, the Company is required to issue any remaining shares to be converted
in the following proportions: one-third in common shares and two-thirds in
class A preferred shares.
Notes
On February 23, 1996, OPP Petroquímica issued and sold U.S.$125.0 million
aggregate principal amount of unsecured 11.5% Notes due 2004 pursuant to Rule
144A and Regulation S under the Securities Act. Interest on these notes is
payable semi-annually in arrears in February and August in each year, and the
notes mature on February 22, 2004. As of December 31, 2002, the outstanding
amount of these notes held by third parties was U.S.$28.0 million. The
obligations under these notes were assumed by OPP Química in December 2000,
when OPP Petroquímica merged with and into OPP Química, and then were assumed
by the Company as a result of the Related Party Mergers.
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On October 29, 1996, OPP Petroquímica issued and sold U.S.$100.0 million
aggregate principal amount of unsecured 11% Notes due 2004, pursuant to Rule
144A and Regulation S under the Securities Act. Interest on these notes is
payable semi-annually in arrears of April and October in each year, and the
notes mature on October 29, 2004. As of December 31, 2002, the outstanding
amount of these notes held by third parties was U.S.$55.7 million. The
obligations under these notes were assumed by OPP Química in December 2000,
when OPP Petroquímica merged with and into OPP Química, and then were assumed
by the Company as a result of the Related Party Mergers.
By December 31, 2002, Lantana Trading Company (then a subsidiary of OPP
Química and currently a direct subsidiary of Braskem as a result of the Related
Party Mergers) had reacquired U.S.$180 million of OPP Petroquímica notes, and
had resold U.S.$37 million.
On June 25, 1997, the Company issued and sold U.S.$150.0 million aggregate
principal amount of unsecured 9% Notes due 2007 pursuant to Rule 144A and
Regulation S under the Securities Act. Interest on these notes is payable
semi-annually in arrears in June and December in each year, and the notes
mature on June 25, 2007. As of December 31, 2002, the outstanding amount was
U.S.$261.8 million.
On July 24, 1997, Trikem issued and sold U.S.$250.0 million aggregate
principal amount of unsecured 10.6% Notes due 2007 pursuant to Rule 144A and
Regulation S under the Securities Act. Interest on these notes is payable semi-annually in arrears in
January and July in each year, and these notes mature on July 24, 2007. Trikem
has the right to repurchase these notes on July 24 of each year beginning on
July 24, 2002. As of December 31, 2002, the outstanding amount of these Trikem
notes was U.S.$150.2 million.
Bank Credit Facilities
In July 1999, Odequi Overseas Inc., now one of the Company's direct
subsidiaries ("Odequi Overseas"), received a loan in the principal amount of
U.S.$110.0 million from a syndicate of financial institutions. Odequi Overseas
used the proceeds of this loan to acquire non-voting preferred shares of Odequi
and OPE Investimentos. Odequi Overseas pre-paid approximately U.S.$30.0 million
of this loan prior to its amendment and restatement in July 2002. The amended
and restated loan is in the principal amount of U.S.$80.0 million and matures
in July 2003. This loan bears interest at the rate of LIBOR plus 1.4% per annum
payable semi-annually in arrears in January and July of 2003. This loan is
secured by all of the non-voting preferred shares of Odequi and OPE
Investimentos, which shares are owned by Odequi Overseas. Odequi and OPE
Investimentos have agreed to pay dividends on the preferred shares in amounts
equal to the interest due on the Odequi Overseas loan and to redeem the
preferred shares for amounts that will be used by Odequi Overseas to pay the
principal of the loans. The
Company intends to refinance this debt on or prior to its maturity in July
2003. The outstanding balance of this loan as of December 31, 2002 was
U.S.$80.0 million.
In January 1998, several financial institutions granted a loan in the
amount of U.S.$30.0 million to Proppet to finance construction of its PET and
DMT plant in Camaçari, Bahia. This loan has since been amended to reflect,
among other provisions, the merger of Proppet into the Company. ODBPAR
Investimentos S.A., one of Braskem's shareholders ("ODBPAR"), Norquisa and
Mitsubishi have guaranteed this loan. ODBPAR and/or Norquisa have also agreed
to reimburse Mitsubishi for any payments that it makes in respect of this
guarantee if the Company defaults on its payment obligations under the loan. To
guarantee their reimbursement obligations, Norquisa and ODBPAR have
caused the Company to grant Mitsubishi a second mortgage on its DMT and PET real
properties and to pledge the equipment related to its DMT and PET production.
The outstanding balance of this loan as of December 31, 2002 was U.S.$18.8
million.
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Acquisition Financing
In September 1992, Odequi purchased shares of PPH Companhia Industrial de
Polipropileno and Poliolefinas S/A, the predecessors to OPP Química. Odequi
paid 10% of the purchase price in cash and the remaining 90% was financed by
Banco do Brasil over a 12-year term. The principal amount of this loan is
adjusted monthly for inflation, and the loan bears interest at the rate of 4.5%
per annum. Interest is payable semi-annually, and the principal amortizes in
17 semi-annual installments. The outstanding balance of this loan at December
31, 2002 was U.S.$34.9 million. This loan is secured by the shares of OPP
Química and is fully guaranteed by Odequi. As part of the
Company's corporate
restructuring, the obligations under this loan were fully assumed by OPP
Química in December 2000 and were subsequently assumed by the
Company as a result of the
Related Party Mergers.
In September 2001, BNDESPAR sold one billion Class B preferred shares of
Conepar to Nova Camaçari for a purchase price of approximately U.S.$46.4
million, and as part of the transaction, BNDESPAR extended a loan to Nova
Camaçari in a principal amount equal to the purchase price. This loan bears
interest at the TJLP rate plus 4% per annum, payable annually each August 15.
The principal amount of this loan is due on August 15, 2006. BNDESPAR has the
option to convert the principal amount of this loan into the
Company's class A preferred
shares upon the maturity of this loan. At December 31, 2002, the outstanding
amount of this loan was U.S.$50.0 million. The obligations under this loan
were assumed by the Company in connection with its merger with Nova Camaçari.
Export Prepayment Facilities
In December 2001, the Company's predecessor, Copene, entered into a
U.S.$250.0 million syndicated credit agreement. The loan is secured by certain
of the
Company's exports. The loan was disbursed in two tranches. Copene used the
proceeds from these debentures to refinance in part its obligations in
connection with the acquisition of the ESAE Assets in the Auction. This credit
agreement was amended and restated in October and December 2002 to change the
terms of certain financial covenants and to add related definitions.
The first tranche of this loan in the principal amount of U.S.$80.0
million bears interest at the rate of three-month LIBOR plus 4.25% per annum,
payable quarterly in arrears. Principal on the first tranche is payable in
seven installments beginning in June 2003 and the final maturity is in December
2004. Amortization of the principal is scheduled to match sales of the
Company's exports
that are not pledged to support other obligations.
The second tranche of this loan in the principal amount of U.S.$170.0
million bears interest at the rate of three-month LIBOR plus 5.25% per annum,
payable quarterly in arrears. Principal on the second tranche is payable in 15
installments beginning in June 2003 and the final maturity of the second
tranche is in December 2006. Amortization of the principal is scheduled to
match sales of the Company's exports that are not pledged to support other
obligations. At December 31, 2002, the principal amount outstanding to third
parties on the first and second tranches was U.S.$217.0 million.
In April 2001, Trikem received an export pre-payment loan of U.S.$50.0
million from two financial institutions. This loan matures in June 2004 and
bears interest at the rate of three-month LIBOR plus 2.375% per
annum payable quarterly in arrears. This loan amortizes in 14 equal
quarterly installments structured to correspond to excess distributions to
Trikem from the trust that issued the 6.7% Investor Certificates due 2004 as
part of an export securitization. This loan is secured by Trikem's right to
payments from the trustee. The Company guarantees Trikem's performance under
the loan documents. As of December 31, 2002, the outstanding principal of this
loan was U.S.$16.4 million.
On July 30, 1997, a trust formed by Trikem issued and sold U.S.$100
million aggregate principal amount of 6.7% Investor Certificates due 2004. The
Investor Certificates are to be paid from the proceeds of accounts receivable
generated from export sales of PVC and EDC by a subsidiary of Trikem to Nissho
Iwai Corporation. Interest is payable quarterly in arrears in March, June,
September and December of each year, and the Investor Certificates mature on
June 1, 2004. The Investor Certificates represent fractional interests in the
trust whose sole asset is receivables generated pursuant to a supply agreement
with Nissho Iwai. Trikem agrees to sell PVC and EDC to its subsidiary so that
the subsidiary can sell the products to Nissho Iwai. Trikem's obligations to
sell products to its subsidiary is supported by a surety bond. Trikem also
guarantees payment of the Investor Certificates. The outstanding balance of
these Investor Certificates as of December 31, 2002 was U.S.$72.2 million.
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In June 2000, OPP Petroquímica entered into a prepayment advance for
products to be exported to a foreign customer in the amount of U.S.$75.3
million. This prepayment advance bears interest at the rate of six-month LIBOR
plus 1.7% per annum. The maximum term for shipment of the subject products
ends in December 2003. At December 31, 2002, the unpaid principal amount of
this prepayment advance was approximately U.S.$49.7 million. OPP Petroquímica's
obligation to deliver export products is secured by a surety bond. The
obligations under this prepayment advance were assumed by OPP Química in
December 2000 when OPP Petroquímica merged with and into OPP Química and were
assumed by the Company as a result of the Related Party Mergers.
In December 2002, OPP Química entered into a prepayment advance for
products to be exported to a foreign customer in the amount of U.S.$97.2
million. This prepayment advance bears interest at the rate of six-month LIBOR
plus 3.75% per annum. This prepayment advance will be paid through partial
semi-annual shipments from June 2003 to June 2006. At December 31, 2002, the
unpaid principal amount of this prepayment advance was approximately U.S.$97.2
million. OPP Química's obligation to deliver export products is guaranteed by
a surety bond. The obligations under this prepayment advance were assumed by
OPP Química in December 2000 when OPP Petroquímica merged with and into OPP
Química and were assumed by the Company as a result of the Related Party
Mergers.
BNDES Development Loans
The Company maintains various credit facilities with BNDES to fund general
capital expenditures associated principally with the expansion of its
production capacity, environmental projects and the development of operation
control centers, laboratories and a waste treatment station, of which U.S.$76.2
million amount was outstanding at December 31, 2002. Amounts borrowed from
BNDES are secured by a mortgage on certain real estate properties and a pledge
of certain equipment and machinery the Company owns. The interest rate on
amounts the Company borrowed from BNDES is based on a floating index
(the TJLP, a reference interest rate or the BNDES basket of
currencies), plus a margin of 3.9% to 10.8% per annum. The principal and interest on these credit facilities are
payable monthly through July 2007.
Other
Petrobras maintains a R$570.0 million (equivalent to U.S.$161.3 at the
December 31, 2002
real
/U.S. dollar exchange rate) rotating naphtha supply line of credit with
the Company in respect of its supply of naphtha to the Company. As of February
24, 2003, the facility is guaranteed by the mortgage of two of OPP Química's
industrial plants. The
Company is in the process of negotiating an additional credit facility
with Petrobras to be guaranteed by a mortgage on one of its plants in Triunfo,
in the State of Rio Grande do Sul.
The Company has other financing transactions to finance its working
capital requirements and certain investments, which are guaranteed by its
shares and properties.
Financing Strategy
The Company's financing strategy is to extend the average maturity of its
outstanding indebtedness, including by repaying short-term debt through
longer-term borrowings and issuing longer-term debt securities. In addition,
part of the Company's financing strategy over the next several years involves
the Company's use of a substantial portion of its consolidated cash flow
(including from synergies resulting from the mergers that formed part of the
Company's consolidation and possibly from the sale of certain non-core assets)
to pay principal and interest with respect to its outstanding indebtedness.
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One of the Company's principal subsidiaries, Trikem, is party to certain
debt agreements that restrict its ability to transfer funds to the Company in
the form of cash dividends, loans or advances. As the Company does not reply
primarily on funding from its subsidiaries for working capital and other
purposes, these restrictions have not had, and are not expected to have, any
material adverse impact on the ability of the Company to meet its cash
obligations.
Research and Development
The Company's policy is to maintain the level of research and development
expenditure necessary to enable it to be a "fast follower" of state-of-the-art
technologies. This policy is directed towards sustaining the Company's
performance and enhancing the efficiency of the Company's operations. In
addition to its small team of staff, the Company also places emphasis on bench
research and has links with research and development programs at the major
Brazilian universities as well as recognized foreign research and development
centers. During 2002, 2001 and 2000 the Company invested U.S.$5.7 million,
U.S.$4.1 million and U.S.$2.3 million, respectively, in research and
development.
With the deregulation of the petrochemical sector, the Company's
technological activities have been directed to projects of a strategic nature,
aimed at increasing ethylene production capacity, development of new products and
processing of new raw materials. A German company, Linde A.G., was contracted
to prepare the engineering project for an increase of 80 thousand
tons in annual ethylene production capacity, as well as to develop the Conceptual Design
and Basic Engineering for a new Condensate Fractionation Unit. Other projects
have been developed in order to allow the upstream units to process these
higher capacities and improve their productivity.
The Company maintains a center for technology and innovation in Triunfo,
Rio Grande do Sul. The center's principal purpose is to evaluate and analyze
technology developed abroad for the petrochemical market and to adapt such
technology to be utilized in the Brazilian market. This center
integrates several laboratories and employs approximately 125 engineers and technicians
specialized in developing products and modern equipment, rendering technical
and support services to its customers and improving the Company's technological
standards. This center has developed new applications for the development of
linear low density polyethylene and the development of improvements in
polyolefins packaging for the Company's clients.
As a result of its
investments and the research performed at this center, the Company offers
numerous new products every year and currently has pending over 70 patent
applications. In 2002, the center provided services to approximately 180 clients. These
services consisted of performing specific tests and responding to requests to develop new
products on behalf of the Company's clients. The
Company inaugurated a new wing in
December 2002 to assist in its continued efforts to develop new
products and applications and to improve its competitiveness.
In addition to developing new products and applications, the center is an
important part of the Company's strategy to improve its clients' products and
to create new domestic and international business opportunities. The Company
works closely with its customers in order to understand their concerns and to
provide a tailored product. This technical assistance enables the Company to
enhance customer loyalty.
The Company also maintains partnerships with Brazilian and foreign
universities, research centers and public institutes to assist it in developing
research projects, including among other universities and institutes, the
Universidade de São Carlos
,
Universidade Federal de Campina Grande
,
Unicamp
,
Instituto de Pesquisa Nuclear
(Nuclear Research Institute, or IPEN).
The original patents covering the majority of the Company's petrochemical
production process are in the public domain. The Company was licensed to use
certain technology in connection with the construction of the second ethylene
plant but is not dependent on any external patents or know-how for its
operations. This is also true for the majority of its aromatics plants, with
the exception of the para-xylene expansion project, concluded in 1998, where a
know-how license is in effect for 15 years.
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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
Directors and Senior Management
Braskem's bylaws provide that its Board of Directors is composed of eleven
members and eleven alternate members. During periods of absence or temporary
unavailability of a regular member of Braskem's Board of Directors, the
corresponding alternate member substitutes for the absent or unavailable
regular member. Braskem's Board of Directors is a decision-making body
responsible for, among other things, determining policies and guidelines for
Braskem's business and Braskem's wholly-owned subsidiaries and controlled
companies. Braskem's Board of Directors is responsible for supervising
Braskem's Board of Executive Officers and monitors its implementation of the
policies and guidelines established by the Board of Directors. Under the
Brazilian Corporate Law, Braskem's Board of Directors is also responsible for
hiring external auditors.
The members of Braskem's Board of Directors are elected at general
meetings of shareholders for two-year terms and are eligible for reelection.
Under a shareholders' agreement, the Odebrecht Group has the right to nominate
a majority of the Company's Board of Directors, and the Mariani Group has the
right to nominate at least one member of the Company's Board of Directors. See
"Item 7. Major Shareholders and Related Party Transaction—Shareholders
Agreements—Controlling Shareholders Agreement." The terms of all current
members expire in 2004. Members of Braskem's Board of Directors are subject to
removal at any time with or without cause at a general meeting of shareholders.
Braskem's bylaws do not contain any citizenship or residency requirements. The members
of Braskem's Board of Directors must be shareholders of Braskem. The President
and the Vice President of Braskem's Board of Directors are elected at a general
meeting of shareholders from among the members of Braskem's Board of Directors,
serve for one-year terms, are eligible for reelection and are subject to
removal at any time with or without cause at a general meeting of shareholders.
Braskem's Board of Directors is presided over by the President and, in his
absence, by the Vice President.
Braskem's Board of Directors ordinarily meets four times a year and
extraordinarily when a meeting is called by the President, the Vice-President
or any two members of Braskem's Board of Directors. Decisions of Braskem's
Board of Directors require a quorum of a majority of the directors and are
taken by majority vote.
The following table sets forth certain information with respect to the
current members of Braskem's Board of Directors:
Name
Member Since
Position Held
Age
Pedro Augusto Ribeiro Novis
Aug. 15, 2001
President of the Board
56
Alvaro Fernandes da Cunha Filho
Nov. 6, 1997
Vice-President of the Board
54
José de Freitas Mascarenhas
Aug. 15, 2001
Board Member
61
Luiz Fernando Cirne Lima
Aug. 15, 2001
Board Member
70
Newton Sergio de Souza
Aug. 15, 2001
Board Member
50
Alvaro Pereira Novis
Aug 15, 2001
Board Member
59
Francisco Teixeira de Sá
May 24, 2001
Board Member
54
Fernando de Castro Sá
April 29, 2003
Board Member
36
Carlos Alberto de Meira Fontes
Aug. 15, 2001
Board Member
53
Margareth Feijó Brunnet
Sept. 27, 2002
Board Member
44
Cezar dos Santos
April 29, 2003
Board Member
63
Summarized below is information regarding the business experience, areas
of expertise, and principal outside business interests of Braskem's current
directors:
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Pedro Augusto Ribeiro Novis.
Mr. Novis was elected to Braskem's Board of
Directors as a nominee of ODB. He has been a member of the Company's Board of
Directors since August 2001 and was elected president of the Board in March
2002. He has also been: a member of the Board of Directors of ODB since
October 1997; the chief executive officer of ODB; the chief executive officer
of ODBPAR; and a member of the advisory council of CNO (another one Braskem's
shareholders). Mr. Novis also worked at: CNO from March 1968 through 1980,
where he was the general officer of the vice president of the business projects
since August 1979; Companhia Brasileira de Projetos e Obras — CBPO, where he
was executive officer from August 1980 through March 1984 and general officer
from April 1984 through March 1985; and vice-president executive officer from
March 1985 through September 1997, when he started working at ODB. He holds a
law degree from the Universidade Federal da Bahia.
Alvaro Fernandes da Cunha Filho.
Mr. Cunha Filho was elected to Braskem's
Board of Directors as a nominee of ODB and has been a member of the Company's
Board of Directors since 1997. He is currently the vice president of Braskem's
Board of Directors and of the Board of Directors of Norquisa. Mr. Cunha also
served as: the Secretary of Industry, Commerce and Tourism of the State of
Bahia from 1983 through 1987; executive vice president of Unipar – União de
Indústrias Petroquímicas S.A. from 1993 through 1994; a member of the board of
directors of Unipar – União de Indústrias Petroquímicas S.A. from 1994 through
1996 and president of OPP Química, Trikem, Odequi, Copec – Complexo
Petroquímico de Camaçari, Cetrel – Central de Tratamento de Efluentes Líquidos
S.A., and Copesul. Mr. Cunha Filho holds a bachelor's degree in civil
engineering and a master's degree in economics from the Universidade Federal da
Bahia.
José de Freitas Mascarenhas.
Mr. Mascarenhas was elected to Braskem's
Board of Directors as a nominee of ODB in 2001. He is an executive officer of
ODB and a member of the advisory council of CNO; the president of Fieb –
Federação das Indústrias do Estado da Bahia and of Cieb – Centro das Indústrias
do Estado da Bahia since September 1992; and vice president of CNI –
Confederação Nacional das Indústrias since October 1985 and of ABIQUIM since
May 1993. Mr. Mascarenhas has also served as the president of Veracel Celulose
S.A., EPB – Empresas Petroquímicas do Brasil S.A. from August 1988 through
March 1998 and was a member of the board of directors of Coelba – Companhia de
Eletricidade do Estado da Bahia from March 1987 was a April 1997. Mr.
Mascarenhas holds a bachelor's degree of civil engineering from Universidade
Federal da Bahia.
Luiz Fernando Cirne Lima.
Mr. Lima was elected to Braskem's Board of
Directors as a nominee of ODB in 2001. He is currently the superintendent
executive officer of Copesul and a member of the Board of Directors of Banco
Icatu S.A., a Brazilian bank. Mr. Lima has also served as: the Minister of
Agriculture from 1969 through 1973; a member of the board of directors of
Gazeta Mercantil from 1977 through 1993, a member of the executive board of
politic and social orientation of Fiesp – Federação das Indústrias do Estado de
São Paulo; and a member of the board of executive officer of Varig S.A. Mr.
Lima holds a bachelor's degree of agronomical engineering from the Universidade
Federal do Rio Grande do Sul.
Newton Sergio de Souza.
Mr. Souza was elected to Braskem's Board of
Directors as a nominee of ODB in 2001. He is currently the general counsel and
an executive officer of ODB, an alternate member of the Board of Directors of
Norquisa, an executive officer of ODBPAR, the vice president of the board of
directors of Companhia de Concessões Rodoviárias – CCR, an operator of toll
roads, the vice president of the board of directors of Concessionária da
Rodovia Presidente Dutra S.A., an operator of toll roads, the vice president of
the Board of Directors of Concessionária do Sistema Anhanguera-Bandeirantes
S.A., an operator of toll roads, the vice president of the Board of Directors
of Concessionária Ponte Rio-Niterói S.A., an operator of toll roads, a member
of the Board of Directors of Concessionária Rodovia dos Lagos S.A., an operator
of toll roads, an executive officer of Odebrecht Serviços de Infra-Estrutura
S.A., and a member of the Advisory Council of CNO. Mr. Souza has also served
as a visiting lawyer at the law firm Dechert, Price & Rhoads (Philadelphia,
USA), as a senior lawyer at the law firm Pinheiro Neto Advogados from 1976
through 1982, and as senior counsel of Latin America and Caribbean Division of
the World Bank (Washington DC, USA) from 1982 through 1987. Mr. Souza holds a
law degree from Pontifícia Universidade Católica do Rio de Janeiro and an LL.M.
from the University of Pennsylvania, with a specialization in capital markets.
Alvaro Pereira Novis.
Mr. Novis was elected to Braskem's Board of
Directors as a nominee of ODB in 2001. He is currently the chief financial
officer and executive officer of ODB and an executive officer of ODBPAR. Mr.
Novis has also served as: the national division vice president of
BankBoston in 1966. In 1980, he was elected Managing Director of Banco Iochpe
de Investimentos, where he became president in 1995 upon its association with
Bankers Trust. From 1989 to 1991, Mr. Novis worked in the Banco BHM, in
association with Aralbank. Mr. Novis holds a bachelor's degree in economics
from the Universidade do Rio de Janeiro and a master's degree in Public
Administration from Fundação Getúlio Vargas.
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Francisco Teixeira de Sá.
Mr. Sá was elected to Braskem's Board of
Directors as a nominee of ODB in 2001. He is the president of the Board of
Directors of Norquisa, the president of the Board of Directors of Copene
Monômeros Especiais S.A., the president of Pronor, the president of the Board
of Directors of Engepack S.A., an executive officer of CPN Distribuidora de
Combustíveis Ltda., an executive officer of Tegal Terminal de Gases Ltda., an
executive officer of PIN Petroquímica S.A. and an executive officer of Latapack
S.A. Mr. Sá has also served as: engineering and production manager of Dow
Química S.A. from 1973 through 1984; as industrial officer of EDN – Estireno do
Nordeste S.A. from 1984 through 1989; and commercial officer and superintendent
officer of Caraíba Metais S.A. from 1989 through 1997. He holds a bachelor's
degree in chemical engineering from the Universidade Federal da Bahia.
Fernando de Castro Sá.
Mr. Sá was elected to Braskem's Board of Directors
as a nominee of Petros on April 29, 2003. He is currently the supply legal
manager of Petrobras and a partner of the law office De Castro Sá e Pagnano
Advogados Associados. Mr. Sá has also served as a trainee in the legal
department of Banco Nacional S.A. and as a lawyer with the law firm of Teixeira
& Advogados Associados. Mr. Sá holds a bachelor's degree in sociology from the
Universidade Federal do Rio de Janeiro and a post graduate degree in business
law from Fundação Getúlio Vargas (FGV).
Cezar dos Santos.
Mr. Santos was elected to Braskem's Board of Directors
as a nominee of Previ on April 29, 2003. He is a retired employee of Previ and
Banco do Brasil S.A. While an employee of Banco do Brasil S.A. and Previ, Mr.
Santos also served as: a member of the fiscal council of Companhia de
Eletricidade do Estado da Bahia – COELBA from April 1998 through April 2001;
and is president of the fiscal council of Tupi S.A. since April 2001. Mr.
Santos has a degree in economics from Universidade do Estado do Rio de Janeiro,
a law degree from the Universidade Santa Úrsula, Rio de Janeiro, and an MBA
degree from Fundação Getúlio Vargas (FGV).
Carlos Alberto de Meira Fontes.
Mr. Fontes was elected to Braskem's Board
of Directors as a nominee of Petroquisa in 2001. He is currently the president
of Petroquisa since April 2000, the Petrochemical Executive Manager of
Petrobras, the president of the Advisory Council of the Fábrica Carioca de
Catalisadores, a chemical catalyst company, the vice president of the Board of
Directors of Petroquímica União S.A., the vice president of the Board of
Directors of Rio Polímeros S.A. and a member of the Officers Council of
Associação Brasileira de Indústrias Químicas e Produtos Derivados (Brazilian
Association of Chemical Industry and Derivative Products, or ABIQUIM). Mr.
Fontes has also served as manager of petrochemical projects at Petrobras. Mr.
Fontes holds a bachelor's degree in chemical engineering from the Instituto
Militar de Engenharia (IME), took courses in engineering given by Petrobras,
holds a postgraduate degree in business management from the Universidade
Federal do Rio de Janeiro and attended a program for advanced management.
Margareth Feijó Brunnet.
Mrs. Brunnet was elected to Braskem's Board of
Directors as a nominee of Petroquisa in 2002. She is the manager of
Petrochemicals Projects of Petrobras, the general manager of Investments in
Petrochemical Centers of Petrobras, an executive officer of Petroquisa, an
executive officer of Downstream Participações S.A., a holding company, and a
member of the Board of Directors of Copesul. Mrs. Brunnet has also served as
petrochemical projects manager from April 2000 through April 2002, as
petrochemical projects coordinator from December 1999 through April 2000, as
chief of the department of hydrorefinement at a Petrobras refinery in 1999 and
chief of the department of special products at a Petrobras refinery from 1996
through 1998. Mrs. Brunnet holds a bachelor's degree in chemical engineering
from the Universidade Federal do Rio Grande do Sul, took courses in process
engineering from Petrobras and holds a postgraduate degree in management
development.
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Board of Executive Officers
Braskem's Board of Executive Officers is Braskem's executive management
body. Braskem's executive officers are Braskem's legal representatives and are
responsible for Braskem's internal organization and day-to-day operations and
the implementation of the general policies and guidelines set forth by the
Board of Directors.
Braskem's bylaws require that the Board of Executive Officers consist of a
Chief Executive Officer and between three and nine additional members, each
responsible for business areas that Braskem's Board of Directors assigns to
them. The members of Braskem's Board of Executive Officers, other than
Braskem's Chief Executive Officer, have no formal titles (other than the title
of executive officer) but have the informal titles set forth in the table
below.
The members of Braskem's Board of Executive Officers are elected by
Braskem's Board of Directors for two-year terms, corresponding to the terms of
the members of Braskem's Board of Directors, and are eligible for reelection.
The current term of all of Braskem's executive officers ends in 2004.
Braskem's Board of Directors may remove any executive officer from office at
any time with or without cause. According to the Brazilian Corporate Law,
executive officers must be residents of Brazil but need not be shareholders of
the Company. Braskem's Board of Executive Officers holds meetings when called
by Braskem's Chief Executive Officer.
The following table lists the current members of Braskem's Board of
Executive Officers:
Name
Year of Appointment
Position Held
Age
José Carlos Grubisich Filho
2002
Chief Executive Officer
46
Paul Elie Altit
2002
Vice President
Executive Officer and
Chief Financial officer
45
Bernardo Afonso de Almeida Gradin
2002
Vice President Executive Officer
38
Luiz de Mendonça
2002
Vice President Executive Officer
40
Mauricio Roberto de Carvalho Ferro
2002
Vice President
Executive Officer and
General Counsel
37
Roberto Prisco Paraíso Ramos
2002
Vice President Executive Officer
56
Rogério Affonso de Oliveira
2002
Vice President Executive Officer
52
Summarized below is information regarding the business experience, areas
of expertise and principal outside business interests of Braskem's current
executive officers:
José
Carlos Grubisich Filho.
Mr. Grubisich is currently Braskem's chief
executive officer. He is also currently the chief executive officer of Odequi,
Copene Participações and Trikem and the vice president of the board of
directors of Copesul. He was the chief executive officer of OPP Química and the
president of the board of directors of OPP Química. In January
1997, Mr. Grubisich became the chairman and the chief financial officer of Rhodia S.A. (currently known as "Rhodia Brasil Ltda," a member of
the Rhône Poulenc Group) for Brazil and Latin America. From 1999 to 2001, he
served as vice-president of Rhodia Fine Organics worldwide and was member of
the executive committee of the Rhône Poulenc Group. Mr. Grubisich holds a
bachelor's degree in chemical engineering from Escola Superior de Química
Oswaldo Cruz and an MBA degree from INSEAD – France
.
Bernardo
Afonso de Almeida Gradin.
Mr. Gradin is currently one of
Braskem's vice president executive officers and head of Braskem's Vinyls Unit.
He is also a member of the Board of Directors of Copene Participações and
Trikem and an executive officer of Odequi and of Trikem. Mr. Gradin was a
member of the board of directors of OPP Química. Mr. Gradin also served as the
production manager of CNO from July 1986 through May 1990, as contract manager
of Odebrecht of America, from July 1990 through June 1996 and as superintendent
officer of CNO from September 1996 through December 2000. Gradin holds a
bachelor's degree in civil engineering from the Universidade Federal da Bahia.
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Luiz de Mendonça.
Mr. Mendonça is currently one of Braskem's vice
president Executive Officers and head of Braskem's Polyolefins Unit. He is
also an executive officer of Copene Participações and Polialden
(Superintendent) and a member of the board of directors of Polialden and was an
executive officer of OPP Química. Mr. Mendonça also worked 15 years at Rhodia,
where he served as general manager of production, supply and finance and
marketing, an officer of the chemical division (Latin America) and
vice-president of Rhodia U.S.A. Mr. Mendonça holds a bachelor's degree in
production engineering from Escola Politécnica da Universidade de São Paulo
and an MBA degree from INSEAD – France.
Mauricio Roberto de Carvalho Ferro.
Mr. Ferro is currently Braskem's vice
president and general counsel, an executive officer of Odequi, a member of the
Board of Directors of Companhia Industrial Alagoas – Cinal, a utilities
company, an executive officer of Copene Monômeros Especiais S.A., a member of
the board of directors of Copene Participações, an alternate member of the
Board of Directors of Politeno, a member of the Board of Directors of Polialden
and a member of the Board of Directors of Trikem. Mr. Ferro was also an
executive officer and general counsel of OPP Química and a member of the Board
of Directors of Nitrocarbono. Mr. Ferro has also served as a lawyer at the law
firm of Carlos Eduardo Paladini Cardoso in 1989 and as a lawyer at the law firm
of Bulhões Pedreira, Bulhões Carvalho e Advogados Associados from 1991 until
1995. Ferro holds a law degree from the Pontifícia Universidade Católica do
Rio de Janeiro and an LL.M. degree from the University of London and from the
London School of Economics.
Paul Elie Altit.
Mr. Altit is currently one of Braskem's vice president
executive officers and Braskem's chief financial officer, an alternate member
of the Board of Directors of Companhia de Desenvolvimento Rio Verde –
Codeverde, a utilities company, an executive officer of Odequi, a member of the
Board of Directors of Cinal, the vice president of the Board of Directors of
Copene Participações, a member of the Board of Directors of Polialden, the
investor relations officer of Polialden, a member of the Board of Directors of
Trikem and the investor relations officer of Trikem. Mr. Altit was also the
vice president of the Board of Directors of OPP Química, an executive officer
and chief financial officer of OPP Química, a member of the Board of Directors
of Nitrocarbono and the investor relations officer of Nitrocarbono. Mr. Altit
has also served as the manager of business development of CNO from 1988 through
1990, controller of CNO from 1991 through 1993 and as the chief financial
officer and investor relations officer of CNO from 1994 through 2002. Mr.
Altit holds a bachelor's degree in engineering from the Universidade Federal do
Rio de Janeiro and a post-graduate degree in finance from the Pontifícia
Universidade do Rio de Janeiro.
Roberto Prisco Paraíso Ramos.
Mr. Ramos is currently one of Braskem's
vice president executive officers and head of Braskem's Business Development
Unit. He is also an executive officer and co-chairman of the North Sea
Production Company Ltda. (Scotland), and a member of the board of directors of
Cinal. Mr. Ramos was a member of the board of directors of OPP Química, the
president of the board of directors of Nitrocarbono and the chief executive
officer of Nitrocarbono. Mr. Ramos has also served as the chief financial
officer of Filippo Fochi SpA (Italy) from September 1992 through April 1995, as
the chief financial officer of Tenenge – Técnica Nacional de Engenharia (London
and São Paulo) from May 1995 through June 1997, as superintendent officer and
chairman of Odebrecht Oil and Gas Ltd. (London) from July 1997 through July
2000, and as superintendent officer and chairman of Odebrecht Oil & Gas Ltda.
from August 2000 through August 2002. Mr. Ramos holds a bachelor's degree in
mechanical engineering from the Universidade Federal do Rio de Janeiro, a
post-graduate degree in the Program for Management Development from Harvard
Business School and a master's in finance from the University of Leicester,
England
.
Rogério Affonso de Oliveira.
Mr. Oliveira is currently one of Braskem's
vice president executive officers and head of Braskem's Basic Petrochemicals
Unit. He is also the vice president of the Board of Directors of Cinal, a
member of the Board of Directors of Copene Participações and an alternate
member of the Board of Directors of Polialden. Mr. Olivera was also a member
of the Board of Directors of OPP Química. Mr. Oliveira has also served as an
executive officer of Ceman S.A. – Central de Manutenção de Camaçari from
January 1989 through April 2002, acting in the commercial and industrial areas.
Mr. Oliveira holds a degree of mechanical engineering from the Universidade
Federal do Rio Grande do Sul and took courses in equipment engineering given by
Petrobras.
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Fiscal Council
The
Brazilian Corporate Law permits the Company to establish, and allows
shareholders to request the establishment of, a permanent
conselho fiscal
(Fiscal Council). Accordingly, Braskem's bylaws provide for a Fiscal Council
composed of five members and their respective alternate members. The Brazilian
Corporate Law requires that the Fiscal Council be independent of management
and Braskem's external auditors. The primary responsibility of the Fiscal
Council is to review management's activities and the financial
statements, and
to report their findings to the shareholders.
The members of Braskem's Fiscal Council are elected by Braskem's
shareholders at the annual general shareholders' meeting for one-year terms and
are eligible for reelection. The terms of the members of Braskem's Fiscal
Council expire at the next ordinary annual general shareholders' meeting.
Under the Brazilian Corporate Law, the Fiscal Council may not contain members
that are: on the Board of Directors or on the Board of Executive Officers;
Braskem's employees; employees of a controlled company or of a company that is
a member of the controlled group of companies; or spouses or relatives of any
member of Braskem's management. A person elected to serve on the Fiscal
Council must be a resident of Brazil and either be a university graduate or
have been a company officer or Fiscal Council member of a Brazilian company for
at least three years prior to election to the Fiscal Council.
Holders of preferred shares without voting rights and non-controlling
common shareholders that together hold at least 10% of Braskem's voting shares
are each entitled to elect one member and his or her respective alternate to
the Fiscal Council.
The following table lists the current members of Braskem's Fiscal Council
that were elected by Braskem's shareholders on April 29, 2003:
First Year of
Name
Appointment
Sérgio Pereira da Rocha
2001
Júlio Diniz Bastos Pinto
1999
Ismael Campos de Abreu
2003
Manoel Mota Fonseca
2002
Walter Murilo Melo de Andrade
2002
Compensation
According to Braskem's bylaws, Braskem's shareholders are responsible for
establishing the aggregate compensation the Company pays to the members of
Braskem's Board of Directors, Braskem's Executive Officers and Fiscal Council
members. Braskem's shareholders determine this aggregate compensation at the
general shareholders' meeting each year. Once aggregate compensation is
established, the members of the Board of Directors are responsible for
distributing such aggregate compensation individually to the members of
Braskem's Board of Directors and Braskem's Board of Executive Officers in
compliance with Braskem's bylaws. Braskem's Board of Directors does not have a
compensation committee.
For the year ended December 31, 2001, the aggregate compensation paid by
the Company to all members of Braskem's Board of Directors, members of
Braskem's Board of Executive Officers and members of the Fiscal Council for
services in all capacities was approximately R$2.85 million. For the year
ended December 31, 2002, the aggregate compensation paid by the Company to all
members of Braskem's Board of Directors, members of Braskem's Board of
Executive Officers and members of Braskem's Fiscal Council for services in all
capacities was approximately R$2.5 million. On April 29, 2003, Braskem's
shareholders (acting in the annual general meeting) established the following
compensation for the year 2003: (1) Board of Directors: an aggregate limit of
R$950,000; (2) Executive Officers: a total amount of R$6.5 million; and (3) the
Fiscal Council: 10% of the average
monthly compensation of the Executive Officers to each regular member,
plus travel and lodging expenses (the statutory minimum set forth in the
Brazilian Corporate Law and in Braskem's bylaws). The members of Braskem's
Board of Directors participate in the Company's profit sharing plan.
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Braskem's Executive Officers receive the same benefits generally provided
to Braskem's employees, such as medical (including dental) assistance, private
pension plan and meal vouchers. Like the company's employees, Braskem's
Executive Officers also receive the equivalent to an additional month's salary
paid annually or proportionally to number of months worked in the year (known
as the "thirteenth" (monthly) salary in Brazil), 33.3% of one-month's salary
for vacation, and contributions of 8% of their salary in a public pension fund
known as the
Fundo de Garantia por Tempo de Serviço
(Guarantee Fund for Years
of Service, or FGTS).
Employees
Braskem has invested in a series of courses for the training of
operations, laboratory and maintenance personnel through agreements with
training entities. Education and training activities are a direct result of the
survey of competencies and abilities necessary for employee performance. In the
year 2002, the Braskem's total investment in education and training amounted to
U.S.$1.2 million for 310,000 hours of training, an average of 111 hours per
employee.
Braskem's career plan is based on abilities. The program was established
with Braskem's own resources and technology and has become a national
benchmark in human resources practices. In 2002, the career plan permitted
salary increases for 36% of Braskem's employees.
The
following table sets forth on a pro forma basis the number of
employees of the Company, including the companies which are currently subsidiaries of Braskem, as of the dates
indicated.
Year ended December 31,
2002
2001
2000
1999
1998
Number of Employees
2,817
3,204
3,160
3,260
3,250
Braskem's employees and their dependents have medical and dental
assistance through a system that uses a network of accredited doctors and
services. Braskem principally pays the costs for these services, with a smaller
amount being paid by the employees. A small monthly fee is also
charged to the
employees to pay for more costly medical services. In 2002, Braskem spent
U.S.$4.1 million with this assistance.
Braskem pays part of the monthly payments made to three private pension
funds:
Odebrecht Previdência
;
Fundação Petrobras de Seguridade Social
and
PREVINOR — Associação de Previdência Privada
. The majority of the Company's employees,
2,201 at present, participate in these funds. The private pension funds pay
supplementary pension and retirement amounts relative to those paid by the
Brazilian government's official pension system, intending to provide its
members with a comfortable income at the end of their professional activities.
In 2002, Braskem paid approximately U.S.$2.4 million into these funds. See
Note 12 to the Consolidated Financial Statements.
Braskem's program of participation in results is an established practice
and is based on concepts and criteria negotiated with a committee of employees.
In 2002, the program of participation in results paid U.S.$9.6 million to 2720
employees. An aggregate amount of U.S.$1.68 million of this amount was paid to
the Company's Executive Officers in 2002. The members of the Company's Board
of Directors do not participate in the Company's program of participation in
results.
In Brazil, both employees and employers have the right to organize unions.
Within the confines of a defined geographic area, employees belonging to any
specific "professional category" and employees constituting a specific
"economic category" may each be represented by only one union. Individual
unions generally belong to state-wide union federations, which in turn belong
to nationwide union confederations.
Braskem is a member of the Petrochemicals and Synthetic Resins Industries
Union of the States of Bahia, Alagoas and Rio Grande do Sul, and Braskem's
employees belong to the Petrochemicals Industries Worker's Unions in each of
these States.
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Share Ownership of Directors and Officers
The total number of shares owned by members of Braskem's Board of
Directors and Executive Officers as of June 23, 2003 represented 0.01% of
Braskem's capital stock.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
Major Shareholders
The Company has a total authorized capital of 6,100,000,000 shares
composed of common shares and preferred shares, all without par value. As of
May 31, 2003, the Company had R$1,847,767,225.23 in outstanding capital and
2,196,000,000 authorized shares of common stock, 3,843,000,000 authorized
shares of class A non-voting preferred stock and 61,000,000 authorized shares
of class B non-voting preferred stock. As of May 31, 2003, there were
1,226,091,148 outstanding shares of common stock, 2,160,832,034 outstanding
shares of class A preferred stock and 11,457,740 outstanding shares of class B
preferred stock. Under the Brazilian Corporate Law, the aggregate number of
non-voting shares of the Company may not exceed two-thirds of the total number
of shares.
The Company has registered one class of American Depositary Shares (each,
an "ADS" or a "Preferred Class A ADS") with the Commission pursuant to the Securities Act, each ADS
evidenced by American Depositary Receipts (each, an "ADR"
or a "Preferred Class A ADR") representing 50
class A preferred shares. As of June 27, 2003, the Company had approximately
35 record holders of class A preferred shares, or ADSs representing class A
preferred shares, in the United States. The Company's ADRs are issued by
Citibank N.A. pursuant to a deposit agreement.
The following table sets forth information concerning the ownership of the
Company's common shares and preferred shares as of May 31, 2003 by each person
who the Company knows to be the owner of more than 5% of any class of its
outstanding capital stock, and by all of the Company's directors and executive
officers as a group.
Class B Preferred
Common Stock
Class A Preferred Shares
Shares(4)
Total(5)
Number of
Number of
Number of
Number of
shares
%
shares
%
shares
%
shares
%
Odebrecht Group (1)
553,764,188
45.2
%
941,352,460
43.6
%
—
—
1,495,116,648
44.0
%
Mariani Group (2)
43,634,909
3.6
%
78,401,603
3.6
%
—
—
122,036,512
3.6
%
Norquisa
377,750,595
30.8
%
35,492,482
1.6
%
—
—
413,243,076
12.2
%
Petroquisa (3)
99,590,749
8.1
%
283,324,254
13.1
%
—
—
382,915,003
11.3
%
All directors and
executive officers as
a group (18 persons)
9
0.0
%
290,029
0.01
%
—
—
290,038
0.01
%
Treasury
—
—
53,007,864
2.4
%
—
—
53,007,864
1.6
%
Others
151,350,698
12.3
%
768,963,342
35.6
%
11,457,740
100
931,771,781
27,4
%
(1)
Represents direct ownership of 122,266,186 shares of common stock owned
by ODB, 424,243,853 shares of common stock owned by ODBPAR, 7,254,149
shares of common stock owned by Copene Participações (formerly
Conepar), 937,725,386 shares
of class A preferred stock owned by ODB and 3,627,074 shares of class A
preferred stock owned by Copene Participações. In addition, ODB and
ODBPAR together own 50% of the voting capital stock of Norquisa.
Accordingly, the Odebrecht Group also beneficially owns 50% of the
Company's shares owned directly by Norquisa. The Odebrecht Group
disclaims ownership of the Company's shares owned by Norquisa other than
with respect to its proportionate interest in these shares. The Odebrecht
Group also owns convertible debentures issued originally by OPP Produtos.
Approximately 80% of such debentures could be converted into the Company's
shares at any time, at the Odebrecht Group's discretion. If such right
had been exercised on December 31, 2002, 606,907 new shares of the Company
would have been issued. See Note 9 to the Company's consolidated
financial statements.
(2)
Represents direct ownership of 43,634,909 shares of common stock owned by
Pronor and 78,380,866 shares of class A preferred stock owned by Pronor.
In addition, Pronor owns 16.1% of the voting capital stock of Norquisa.
Accordingly, the Mariani Group (through Pronor) also beneficially owns
16.1% of the Company's shares owned directly by Norquisa. The Mariani
Group disclaims ownership of the Company's shares owned by
Norquisa other than with respect to its proportionate interest in these
shares.
(3)
Represents direct ownership of 99,590,749 shares of common stock owned by
Petroquisa and 283,324,254 shares of class A preferred stock owned by
Petroquisa. Under the Petroquisa Memorandum of Understanding, as amended,
ODB granted Petroquisa an option to purchase the number of the Company's
common shares and preferred shares necessary for Petroquisa to hold a
number of shares equal to the number held by ODB, PQBA and Norquisa,
collectively. Petroquisa can exercise this option in full on a single
occasion on the last day of any month on or prior to April 30, 2005 at a
price based on the Company's enterprise valuation. If Petroquisa
exercises this option, Petroquisa is required to pay the exercise price
with all of the Copesul shares that it holds. If, after Petroquisa
exercises its option, its percentage ownership of the Company's shares is
less than the aggregate percentage ownership of ODB, PQBA and Norquisa,
collectively, then ODB must sell to Petroquisa a sufficient number of the
Company's shares so that such percentages are equal. See "Shareholders
Agreements — Petroquisa Memorandum of Understanding."
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(4)
All of the Company's class B preferred shares were subscribed for by the
Fundo de
Investimento do Nordeste
– FINOR (the Northeast Investment Fund, or
FINOR) and are subject to restrictions on transfer for four years
from the date of their transfer by FINOR.
(5)
The Company has no option plans or options outstanding. Holders of the
Company's common shares each are entitled to one vote per common share.
Changes in Ownership
As of January 1, 2000: Norquisa, owned directly and indirectly, 58.4% of
the Company's common shares and 22.8% of the Company's total capital stock;
Petroquisa owned 15.4% of the Company's common shares and 21.4% of the
Company's total capital stock; Previ owned 5.8% of the Company's common shares
and 6.5% of the Company's total capital stock; Petros owned 5.7% of the
Company's common shares and 2% of the Company's total capital stock; and
Odequi, a member of the Odebrecht Group, owned 1.7% of the Company's common
shares and 0.6% of the Company's total capital stock.
In December 2001, Odequi acquired the common shares of Norquisa held by
Trikem, and Odequi transferred all of its shares of Norquisa and the company to
ODBPAR.
As of January 1, 2000, the holders of the common shares of Norquisa were
Petronor with 23.7%, Pronor with 16.1%, Trikem with 16%, Politeno with 12.5%,
EDN with 12.5%, Oxiteno with 10.4%, Polipropileno with 8.9% and Conepar with
0.04%.
In connection with the Auction, on July 25, 2001, Nova Odequi Ltda., a
subsidiary of Odequi, acquired 23.7% of the common shares of Norquisa from
Petronor.
In connection with the Related Party Mergers, on August 16, 2002, the
Company issued (1) shares representing 43.7% of its voting and total capital
stock to ODB as consideration for the capital stock of OPP Produtos, and (2)
shares representing 3.6% of its voting and total capital stock to Pronor, as
consideration for the capital stock of 52114 Participações. Following the
Related Party Mergers, ODB transferred a portion of the shares that it acquired
to ODBPAR.
As a result of these transactions, as of December 31, 2002: the Odebrecht
Group owned 44.6% of the Company's common shares and 44% of the Company's total
capital stock; the Mariani Group owned 3.6% of the Company's total capital
stock; Norquisa owned 30.8% of the Company's common shares and 12.2% of the
Company's total capital stock; Petroquisa owned 8.1% of the Company's common
shares and 11.3% of the Company's total capital stock; Previ owned 3.1% of the
Company's common shares and 3.4% of the Company's total capital stock; and
Petros owned 3.1% of the Company's common shares and 1.1% of the Company's
total capital stock.
In addition, as of December 31, 2002, the holders of the voting stock of
Norquisa were the Odebrecht Group with 39.7%, Pronor with 16.1%, Politeno with
12.5%, EDN with 12.5%, Oxiteno with 10.4%, Polipropileno with 8.9% and Copene
Participações (formerly Conepar) with 0.04%.
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Shareholders Agreements
Controlling Shareholders Agreement
On July 27, 2001, Odequi and PQBA entered into a shareholders agreement
with respect to their shares of Norquisa and the Company, which was amended on
July 29, 2002 pursuant to the First Amendment to Shareholders Agreement among
Odequi, ODB, ODBPAR and PQBA (as amended, the "Controlling Shareholders
Agreement").
The Controlling Shareholders Agreement provides that:
•
The Odebrecht Group has the right to nominate a majority of
Norquisa's board of directors and a majority of the Company's Board of
Directors;
•
The Mariani Group has the right to nominate at least one member of
Norquisa's board of directors and at least one member of the Company's
Board of Directors;
•
The Odebrecht Group has the right to nominate all of the members of
Norquisa's board of executive officers and the Company's Board of
Executive Officers;
provided
that, if Norquisa's board of directors is
eliminated, the Mariani Group will have the right to nominate at least
one member to Norquisa's board of executive officers;
•
ODB, ODBPAR and PQBA will exercise their voting rights with respect
to the Company and Norquisa to implement the organizational
restructuring of the Company; and
•
ODB, ODBPAR and PQBA will meet prior to each general shareholders
meeting of Norquisa to coordinate their voting with respect to matters
to be submitted to the meeting.
Under the Controlling Shareholders Agreement, ODB and ODBPAR, on the one
hand, and PQBA, on the other hand, granted to the other a right of first
refusal in respect of sales or transfers of shares of Norquisa owned by
either of them. If the Odebrecht Group sells any of its shares of Norquisa,
PQBA has the right to sell a pro rate portion of its shares of Norquisa on the
terms and conditions under which the Odebrecht Group sells its shares. If the
Odebrecht Group sells a sufficient number of its shares of Norquisa to result
in a change of joint control of Norquisa, PQBA has the right to sell all of its
shares of Norquisa on the terms and conditions under which the Odebrecht Group
sells its shares. If the Odebrecht Group sells or transfers direct or indirect
control of the Company to a third party, PQBA has the right to sell all of its
shares of the Company on the same terms offered by the third party acquiring
control of the Company.
Petroquisa Memorandum of Understanding
On July 3, 2001, Odequi and PQBA entered into a Memorandum of
Understanding regarding Shareholders Agreement with Petroquisa (the "Petroquisa
MOU"). The Petroquisa MOU grants (1) veto rights to Petroquisa over certain
actions by the shareholders and the Board of Directors, (2) Petroquisa a right
of first refusal in respect of the Company's common or preferred shares and (3)
Petroquisa tag-along rights. The Petroquisa MOU has a term of 20 years from the
date of the Auction, unless a shareholders' agreement containing the terms set
forth below is entered into prior to that date.
Under the Petroquisa MOU, Petroquisa will have veto rights over the
following matters at any general meeting of the Company's shareholders:
•
Any modification of the rights conferred on shares of the Company
by its bylaws if that modification would adversely affect the value of
the Company's shares;
•
Any change, increase or reduction of the scope of the Company's
corporate purpose, except as necessary for the Company to operate as
an integrated petrochemical company;
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•
Any increase in the number of members of the Company's Board of
Directors;
•
Any decrease in the number of members of the Company's Board of
Directors to be nominated by Petroquisa below two directors;
•
Any capital increase by the Company paid in by tendering goods or
rights, unless those goods or rights relate to the Company's corporate
purpose and a valuation of those goods or rights is performed by a
first tier investment bank or independent auditing firm;
•
Any merger or, spin-off of the Company into another company or of
another company into the Company that could result in the unjustified
dilution of the percentage ownership of Petroquisa except that the
integration of the second generation companies controlled by the
controlling shareholders is expressly permitted; and
•
Dissolution or liquidation of the Company.
Under the Petroquisa MOU, Petroquisa has veto rights over resolutions of
the Company's Board of Directors relating to the following matters:
•
acquisitions, sales or granting of liens against the Company's
fixed assets with values in excess of 30% of the Company's net worth,
if such acquisition, sale or grant of a lien is not related to, or is
outside the scope of, the Company's corporate purpose;
•
transactions involving affiliates of the parties to the Petroquisa
MOU, other than second generation petrochemical producers affiliated
with the parties;
•
any resolution that would cause the Company to fail to meet any of
the following financial ratios, with any projections to determine
compliance with this provision to be performed by an internationally
recognized entity:
•      projected net debt to EBITDA of less than 3.5;
•      EBITDA to interest expense greater than 3.0; and
•      EBITDA to debt service (excluding trade finance) greater than 1.75; and
•
investments in other companies, unless they are in the same business as the Company.
Petroquisa has the right to sell a
pro rata
portion of its shares of the
Company in connection with any sale of the Company's shares by the controlling
shareholder to a third party that involves a change of control.
Petroquisa also has a right of first refusal to increase its participation
to 35% of the Company's voting capital stock, in case of a transfer of shares
by the controlling shareholder.
The Petroquisa MOU was amended on July 26, 2002 by ODB and Petroquisa.
Under this amendment, ODB granted Petroquisa an option to purchase the number
of the Company's common shares and preferred shares necessary for Petroquisa to
hold a number of shares equal to the number held by ODB, PQBA and Norquisa,
collectively. Petroquisa can exercise this option in full on a single
occasion on the last day of any month on or prior to April 30, 2005 at a price
based on the Company's enterprise valuation. If Petroquisa exercises the
option, Petroquisa is required to pay the exercise price with all of the
Copesul shares that it holds. If, after Petroquisa exercises its option, its
percentage ownership of the Company's shares is less than the aggregate
percentage ownership of ODB, PQBA and Norquisa collectively, then ODB must sell
to Petroquisa a sufficient number of the Company's shares so that such
percentages are equal.
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Under the amendment, the controlling shareholders and Petroquisa agreed
that in the event that Petroquisa exercises the option:
•
the controlling shareholder (acting jointly) and Petroquisa will
have equal decision-making powers with respect to the Company,
including the right to elect an equal number of members to the
Company's Board of Directors;
•
the controlling shareholders and Petroquisa will coordinate their
votes in shareholders' meetings and meetings of the Company's Board of
Directors and will vote as a block;
•
Petroquisa would be required to sell all of its investments, other
than passive investments, in companies that compete with the Company
within 18 months of the exercise of the option; and
•
the controlling shareholder and Petroquisa will be prohibited from
acquiring additional shares of the Company from third parties unless
otherwise agreed by the non-acquiring parties.
In addition, under this amendment, Odebrecht and Petroquisa each granted
to the other the right to purchase the Company's common shares held by the
other on the same terms as such shares were offered to a third party.
Pension Funds Memorandum of Understanding
On July 20, 2001, Odequi and PQBA entered into a Memorandum of
Understanding regarding Shareholders Agreement with Petros and Previ ("the
Pension Funds MOU"). The Pension Funds MOU grants veto rights to Petros and
Previ over certain actions by the Company's shareholders and Board of
Directors. Certain provisions in the Pension Funds MOU have a term of 20
years, unless a shareholders' agreement containing the terms set out below is
entered into prior to that date.
Under the Pension Funds MOU, the parties agreed to adopt the following
basic principles for the Company's management:
•
the Board of Directors will be composed of competent professionals;
•
the dividend policy will have as its objective the distribution of
at least 50% of net income available during the relevant period;
provided
that all necessary reserves for the efficient operation and
development of the business are established and maintained; and
•
the Company will adopt a commercial policy that assures the regular
and continuous supply of raw materials and utilities on a competitive
basis and in line with the domestic and international markets.
Under the Pension Funds MOU, Petros and Previ have veto rights (to be exercised
jointly) over the matters for which Petroquisa would have veto rights at
meetings of the shareholders under the Petroquisa MOU.
Under the Pension Funds MOU, Petros and Previ have veto rights (to be
exercised jointly) over resolutions of the Board of Directors relating to the
following matters:
•
acquisitions, sales or
encumbrances of the Company's fixed assets, or
entering into contracts, with values in excess of 30% of the Company's
net worth, if such acquisition, sale or grant of a lien is not related
to, or is outside the scope of, the Company's corporate purpose;
•
entering into contracts with related entities, unless a valuation
is performed by an investment bank selected by the controlling
shareholder from a list of five, first-tier banks prepared by
Petroquisa, Petros and Previ; and
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•
any resolution that would cause the Company to fail to meet any of
the following financial ratios, with any projections to determine
compliance with this provision to be performed by an internationally
recognized entity:
•
projected net debt to EBITDA of less than 3.5;
•
EBITDA to interest expense greater than 3.0; and
•
EBITDA to debt service (excluding trade finance) greater than 1.75.
The veto rights of Petros and Previ are valid so long as on a combined
basis they own, together with other private pension funds, at least 15% of the
Company's voting capital. If the percentage of voting capital owned by Petros
and Previ together is diluted below 15% at any time due to the integration of
the second generation companies, those veto rights will remain in effect for
three years after that time, during which Petros and Previ may purchase more of
the Company's shares in order to maintain their veto rights beyond such
three-year period. Accordingly, although as a result of the Related Party
Mergers the participation of Petros and Previ in the Company's voting capital
was diluted to 6.1%, their veto rights remain in effect.
The Pension Funds MOU contains the following liquidity provisions with
respect to the Company's shares owned by Petros and Previ:
•
Petros and Previ are guaranteed a right of first refusal in respect
of sales or transfers of shares owned by either of them or by other
pension funds, as well as the right to elect members of the Board of
Directors and the Fiscal Council;
•
Under the shareholders' agreement contemplated by the Pension Funds
MOU, Petros and Previ will have the right to sell a
pro rata
portion of
the Company's shares owned by each of them in connection with any sale
of the Company's shares by the Company's controlling shareholders to a
third party that involves a change of control; and
•
In order to transfer their veto rights under the Pension Funds MOU,
Petros and Previ must give the controlling shareholder a right of first
refusal to purchase the Company's shares owned by each of them in the
event of a proposed sale except that the controlling shareholder will
not have a right of first refusal if the Company's shares are being
sold to another private pension fund or to a company that does not
compete with the controlling shareholder.
Related Party Transactions
The following summarizes the material transactions that the Company has
engaged in with its principal shareholders and their respective affiliates
since January 1, 2002.
The Company maintains trade accounts receivable and current and long-term
payables with certain of its affiliates with which it has commercial
relationships. These balances result mainly from purchases and sales of goods
and services, which are at prices and on terms equivalent to the average terms
and prices of transactions that the Company enters into with third parties.
The Odebrecht Group
OPP Química
OPP Química was merged into the Company on March 31, 2003. From August
16, 2002 until March 31, 2003, OPP Química was a subsidiary of the Company.
From July 25, 2001 to August 16, 2002, OPP Química was an affiliate of the
Company as a result of the Odebrecht Group's significant
influence over the Company. For a
description of the OPP Produtos Merger, see "Item 4. Information on the Company—History and
Development of the Company—The Related Party Mergers."
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Prior to the merger of OPP Química into the Company, the Company sold
ethylene and propylene to OPP Química under a long-term contract.
Trikem
Trikem has been a subsidiary of the Company since August 16, 2002. From
July 25, 2001 to August 16, 2002, Trikem was an affiliate of the Company as a
result of their common control by the Odebrecht Group. Before July 25, 2001,
Trikem was an affiliate of the Company as a result of the Odebrecht Group's
significant influence over the Company.
Trikem, as operator of the Vinyls Unit, purchases all its ethylene, its
primary raw material, from the Basic Petrochemicals Unit.
Trikem also purchases electric power, steam, water, compressed air and
nitrogen on market terms from the Basic Petrochemicals Unit.
The Mariani Group
Nitrocarbono
Nitrocarbono was merged into the Company on March 31, 2003. From August
16, 2002 until March 31, 2003, Nitrocarbono was a subsidiary of the Company.
Prior to August 16, 2002, Nitrocarbono was an affiliate of the Company as a
result of the Mariani Group's significant indirect shareholding in the Company.
For a description of the 52114 Participações Merger, see "Item 4. Information
on the Company—History and Development of the Company—The Related Party
Mergers."
Prior to the merger of Nitrocarbono into the Company, the Company sold
ethylene, propylene, electricity and other utilities to Nitrocarbono under a
long-term contract.
Petrobras
Petróleo Brasileiro S.A.
Petrobras is the controlling shareholder of Petroquisa, which holds 8.1%
of the Company's voting capital stock and 11.3% of the Company's total capital
stock. The Company purchases naphtha from Petrobras and sells gasoline and LPG
to Petrobras through its wholly-owned subsidiary Petrobras Distribuidora S.A.
The Company recorded purchases of raw materials and utilities from Petrobras of
U.S.$722.9 million during the fiscal year ended December 31, 2002.
Prior to August 9, 2000 the Company was required under Brazilian law to
purchase all of its naphtha requirements from Petrobras. Beginning on August
9, 2000, the Brazilian government implemented a policy of free naphtha price
negotiation and permitted the Company to purchase naphtha from suppliers other
than Petrobras. On June 22, 1978, the Company entered into a 10-year renewable
contract with Petrobras under which the prices paid by the Company to Petrobras
for naphtha are established based on ARA quotations and are linked to
fluctuations in the U.S. dollar/
real
exchange rate.
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Norquisa Shareholders and Affiliates
Polialden Petroquimica S.A.
Polialden has been the Company's subsidiary since July 2001. Prior to the
Auction, Polialden indirectly owned 23.7% of the Company's voting capital stock
through Petronor. In connection with the Auction, Polialden sold the
Company's shares
that it owned to Odequi. The Company sells ethylene, utilities and hydrogen to
Polialden under long-term contracts that are renewable automatically for
five-year periods. In 2002, the Basic Petrochemical Unit sold approximately
10.8% of its total ethylene sales volumes to Polialden.
The Polyolefins Unit, which includes the operations of Polialden,
purchases 33% of its ethylene and propylene from Basic Petrochemicals Unit. In
2002, these purchases represented approximately 25% of the total cost of sales
of the Polyolefins Unit. The Polyolefins Unit also purchases electric power,
steam and water on market terms from the Basic Petrochemicals Unit.
Politeno Indústria e Comércio S.A.
Politeno owns 12.5% of Norquisa, which, in turn, owns 30.8% of the
Company's voting capital stock. In addition, since September 2001, the Company
has owned 35% of the voting capital stock of Politeno. The Company sells
ethylene, propylene, electricity and other utilities to Politeno under
long-term contracts that are renewable automatically for five-year periods.
Polibrasil S.A.- Indústria e Comércio (formerly known as Polipropileno S.A.)
Polibrasil S.A. – Indústria e Comércio is controlled by the Suzano Group.
Polibrasil owns 8.9% of Norquisa, which, in turn, owns 30.8% of the Company's
voting capital stock. As a result of the Auction and the control exercised by
the Odebrecht Group over Norquisa and the Company, Polibrasil and the Suzano
Group have not had significant influence over the Company since July 25, 2001.
The Company sells propylene to Polibrasil under a long-term contract that is
renewable automatically for five-year periods.
EDN - Estireno do Nordeste S.A.
EDN owns 12.5% of Norquisa, which, in turn, owns 30.8% of the Company
voting capital stock. As a result of the Auction and the control exercised by
the Odebrecht Group over Norquisa and the Company, EDN has not had significant
influence over the Company since July 25, 2001. The Company primarily sells
ethylene and benzene to EDN under long-term contracts that are renewable
automatically for five-year periods.
Oxiteno do Nordeste S.A.
Oxiteno owns 10.4% of Norquisa, which, in turn, owns 30.8% of the
Company's voting capital stock. As a result of the Auction and the control
exercised by the Odebrecht Group over Norquisa and the Company, Oxiteno has not
had significant influence over the Company since July 25, 2001. The Company
sells ethane, methane, oxygen, electricity and other utilities to Oxiteno under
long-term contracts that are renewable automatically for five-year periods.
Investors of the Company
Copesul
The Polyolefins Unit purchases 67% of its ethylene and propylene from
Copesul, in which the Company has a 29.5% interest. The Company has a
long-term supply contract with Copesul that is described in
"Business—Polyolefins Unit—Raw Materials of the Polyolefins Unit—Supply
Contracts and Pricing."
The Polyolefins Unit also buys nitrogen on market terms from Copesul.
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COPESUL – International Trading Inc.
COPESUL – International Trading Inc. is a subsidiary of Copesul. The
Company owns 29.5% of the capital stock of Copesul. At December 31, 2002, the
Company had an outstanding loan from COPESUL – International
Trading Inc. of U.S.$72.8 million, which
arises from an arrangement between OPP and its subsidiary Lantana
Trading Company, with
interest rates equivalent to market rates. In addition to the U.S. dollar
exchange variation, the average annual financial charges correspond to 7.8% to
8.3%.
Ipiranga Petroquímica S.A.
Ipiranga Petroquímica S.A. is one of the controlling shareholders of
Copesul and has entered into a shareholders' agreement with the Company in
connection with its interests in Copesul.
CETREL S.A. - Empresa de Proteção Ambiental
The Company owns 21.1% of the voting and total capital stock of Cetrel.
The Company purchases treatment services on market terms from Cetrel for the
wastewater and organic residues generated by the Company in the Northeastern
Complex. The Company recorded net purchases from Cetrel of U.S.$4.6 million
during the fiscal year ended December 31, 2002.
Petroflex Indústria e Comércio S.A.
The Company owns 20.1% of the voting and total capital stock of Petroflex.
The Company sells butadiene-1 to Petroflex on market terms under a long-term
contract renewable automatically for further five-year periods. The Company
recorded net sales to Petroflex of U.S.$74.0 million during the fiscal year ended
December 31, 2002.
ITEM 8.
FINANCIAL INFORMATION
Consolidated Statements and Other Financial Information
Reference
is made to Item 19 for a list of the financial statements filed
as part of this Registration Statement.
Legal Proceedings
Tax Proceedings
As with many other industrial companies in Brazil, the Company is engaged in
several disputes with Brazilian tax authorities. There are currently certain
legal proceedings pending in which the Company or its properties are involved
that, if decided adversely to the Company, could have a material adverse effect
on its results of operations, financial condition or properties. The principal
tax dispute involves a claim for the acknowledgement of federal
Imposto sobre
Produtos Industrializados
(Federal Excise Tax, or IPI) credits arising
from purchases of ethylene and propylene, taxed at a zero percent rate. The
Brazilian tax authorities argue that Brazilian companies should not be granted
the right to use IPI credits on such raw materials, because there is no legal
provision expressly authorizing such procedure.
IPI is a federal excise tax assessed on a non-cumulative basis. In other
words, the amount of tax paid by suppliers in earlier steps in the production
chain generates a credit to be offset against the IPI due upon the sale of the
final product. According to the tax authorities, the acquisition of raw
materials taxed at a zero percent rate, or that are tax-exempt or non-taxable,
does not generate IPI tax credits. The Company believes that the
interpretation of the federal tax authorities violates the non-cumulative
principle and is not supported by the Brazilian constitution, which does not
impose restrictions on IPI credits derived from transactions involving raw
materials taxed at a zero-percent-rate, or that are tax-exempt or non-taxable.
In 1999, OPP Química and Trikem filed lawsuits in each state in which they
operate seeking IPI tax credits in respect of purchases of ethylene and
propylene from Copene and Copesul. In December 2002, the Federal
Supreme Court, Brazil's highest court, ruled in favor of OPP Química (now merged
with and into the Company), granting OPP Química tax credits in an aggregate
amount of U.S.$284.5 million in respect of IPI taxes paid in respect of OPP
Química's operations in the State of Rio Grande do Sul from 1992 through 2002.
The Company has two other similar IPI lawsuits pending on behalf of OPP Química
in the States of Bahia and São Paulo. Trikem has three similar IPI lawsuits
pending in the States of Alagoas, Bahia and São Paulo. Polialden has one
similar IPI lawsuit pending in the State of Bahia. The Company believes that
it will prevail in each of these lawsuits in light of the recent Federal
Supreme Court decision in favor of OPP Química, based on its assessment of the
merits of the claims and the advice of Brazilian legal counsel. For
the Company's
accounting treatment of this matter, see "Item 5. Operating and Financial
Review and Prospects—Effects of Taxes on the Company's Net Income—Other Taxes."
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The Company is also involved in disputes for acknowledgement of IPI
premium credits. Decree-Law No. 491/69 granted bonuses (premium credits) to
companies that export manufactured products, in order to reimburse these
companies for taxes paid in Brazil prior to the export of the manufactured
products. According to IPI regulations, premium credits could be offset
against other taxes, and could also be transferred to third parties. However,
the Brazilian tax authorities issued a sequence of administrative rules that
reduced, restricted and suspended the use of these premium credits. The
Company believes that these administrative rules are unconstitutional because
rules should not modify or restrict a benefit granted by a Decree-Law. Based
on this legal theory, the Company and its consolidated subsidiaries filed
lawsuits against the Brazilian government in each state in which it operates.
The Company is claiming more than R$551 million (equivalent to U.S.$155.9
million using the
real
/U.S. dollar exchange rate at December 31, 2002) in IPI
premium credits. Federal tax authorities issued deficiency notices against the
Company in respect of such credits. The Company has appealed to the taxpayers'
council (an administrative appeal board) and is awaiting judgment. The Federal
Supreme Court recently held one of the rules suspending IPI premium credits
unconstitutional, concluding that the Brazilian exporter in that case could
offset IPI premium credits against other taxes without limitation. In light of
this decision, the Company, based on the opinion of its Brazilian counsel,
believes that it will prevail in these suits.
Trikem and OPP also filed suits for the acknowledgement of IPI credits
arising from the acquisition of fixed assets and materials not used in
production. According to IPI regulations, the acquisition of fixed assets and
materials not used in production does not generate IPI credits. Nevertheless,
the Brazilian constitution imposes no restrictions on the grant or use of IPI
credits arising from such acquisitions. Therefore, the Company believes that
it has the right to receive IPI credits related to these transactions. The
federal tax authorities have issued deficiency notices with respect to the
amounts already reimbursed to the Company. The Company is discussing the matter
both in administrative and judicial courts.
Another important tax dispute involves the Company's challenge to the
constitutionality of a federal contribution tax on profits, the
Contribuição
Social sobre o Lucro Líquido
(Social Contribution on Net Profits, or CSLL).
The Company's predecessor, Copene, prevailed on this claim in 1992 when,
pursuant to the decision of the Federal Court, approximately R$42.2 million
(equivalent to U.S.$11.9 million using the
real
/U.S. dollar exchange rate at
December 31, 2002) in court deposits were released to the Company. However,
based on an intervening decision by the Federal Supreme Court in an unrelated
proceeding holding that the collection of CSLL is constitutional, the National
Treasury filed a so-called "rescission action" (
ação rescisória
) in November
1993 seeking relief from the 1992 court decision, which had held that the
collection of the CSLL was unconstitutional. Although this rescission action is
still pending in the Superior Court of Justice, the federal tax authorities
issued deficiency notices and commenced tax foreclosure proceedings in respect
of CSLL taxes that they alleged were overdue. The Company's Brazilian legal
counsel has advised it that it is not required to pay any new CSLL assessments
until the rescission action has been finally resolved. Based on the opinion of
its Brazilian counsel, the Company believes that it is unlikely that it will be
required to make the related social contribution tax payments, and therefore, it
has not made any provision in its consolidated financial statements for these
contingencies.
The Company has also filed suits seeking reimbursement or refund of a
portion of PIS paid from August 1, 1991 through January 1995. During this
period, the Company paid PIS in accordance with the rules of Decree-Law No.
2445/88 and Decree-Law No. 2249/88. Subsequent to the enactment of these laws,
the Federal Supreme Court held these laws unconstitutional, concluding that PIS
should have been charged in accordance with Supplementary Law 7/70, which
established a more favorable methodology for the calculation of PIS. Based on
existing jurisprudence, the Company believes that it will prevail in these
suits.
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As of February 1999, Law No. 9,718/98 increased the calculation of the tax
base for contributions in respect of COFINS and PIS from 2% to 3%. The Company
believes that these increases in the tax base and the tax rate are
unconstitutional and have filed suit against the Brazilian government seeking
as relief the right to pay PIS and COFINS at rates prevailing prior to the
enactment of Law No. 9,718/98.
According to Article 138 of the National Tax Code, the federal government
may not impose fines and penalties on taxpayers that voluntarily confess their
tax infractions and pay the corresponding outstanding taxes plus interest.
However, Brazilian tax authorities hold that such confessions do not relieve
the taxpayer from late payment fines. In order to collect late payment fines
with respect to IPI debts confessed and paid by OPP Química, the Brazilian tax
authorities issued deficiency notes against OPP Química, demanding the payment
of approximately R$28.7 million (equivalent to U.S.$8.1 million using the
real
/U.S. dollar exchange rate at December 31, 2002) in late payment fines.
OPP Química filed an appeal with the taxpayers' council (an administrative
appeal board), and is awaiting a decision. The Company believes that it may
prevail in its appeal and that the late payment fines may be withdrawn.
Trikem has also filed a judicial action to overturn the imposition of fines on
overdue taxes payable in installments. The Company believes that Trikem may
prevail in its suit and that the late payment fines may be withdrawn.
Shareholders' Rights Proceedings
Certain owners of the Company's class B preferred shares have filed suits
against the Company requesting voting and other rights conferred upon owners of
the Company's class A preferred shares, including in respect of the
distribution of dividends. The Company lost one of these proceedings in the
first instance, but has filed a rescission action seeking to overturn this
decision and has obtained a stay on the enforcement of this decision until the
rescission action has been resolved. These class B shareholders are also
seeking indemnification for damages that they allege that they have sustained.
The damages portion of the proceeding that the Company lost is still pending.
The other minority shareholder suits against the Company remain pending.
Labor Proceedings
The Company and other companies in the Northeastern Complex enter into
annual collective bargaining agreements with the petrochemical workers' union.
The collective bargaining agreement in force between September 1989 and August
1990 required employers to pay workers cost of living adjustments equal to
84.3% of the
Índice de Preços ao Consumidor
(a consumer price index, or IPC)
per month and prohibited the substitution of the IPC by any index with lower
values than the IPC.
In March 1990, the Brazilian government introduced an economic plan known
as the "Collor Plan," named after the then-President of Brazil. The Collor
Plan provided that cost of living adjustments in wages could be based on other
indices but not on the IPC specifically. Based on judicial precedent, the
Company interpreted the Collor Plan as prohibiting wage increases based on the
IPC, which interpretation was contrary to the terms of the collective
bargaining agreement. To determine which interpretation was legally correct,
the petrochemical employers' union filed a lawsuit against the petrochemical
workers' union, seeking a declaration that the cost of living adjustment
indices provided in the Collor Plan preempted the conflicting provisions in the
collective bargaining agreement. The Regional Labor Court ruled in favor of
the workers' union, which decision was later modified in part on appeal by the
Superior Labor Court. In 1998, the employers' union filed an extraordinary
appeal to the Federal Supreme Court.
This decision was later reconsidered by the Federal Supreme Court, which
reversed a prior decision and held that a private collective bargaining
agreement cannot preempt federal law, especially a law that related to
Brazilian public policy. In 2003, the workers's union requested
reconsideration of this decision. At the time of the filing of this
Annual Report, the judgment was suspended, considering that two of five judges had
already decided in favor of the Company. The decision of the Federal Supreme
Court in this matter is not final and does not address damages. The Federal
Supreme Court may overturn its determination, in which case, this could
adversely effect the Company, as any judgment will most likely also impact the
wages paid by the Company from April 1990 to the present.
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In addition, the Company and its subsidiaries, Trikem S.A., Ceman and
Polialden Petroquímica S.A. are involved in 785 labor suits that involve claims
totaling approximately R$45.0 million (equivalent to U.S.$15.2 million using
the
real
/U.S. dollar exchange rate at June 1, 2003) as of June 1, 2003.
Copesul, Alclor Química de Alagoas Ltda., Cinal, Coponer Florestal Ltda.,
Petroflex, ESAE and Politeno are involved in 448 labor suits that involve
claims totaling approximately R$18.5 million (equivalent to U.S.$6.2 million
using the
real
/U.S. dollar exchange rate at June 1, 2003) as of June 1, 2003.
Braskem has established a provision for labor contingencies in
the amount of R$7.64 million as of June 1, 2003 (equivalent
to U.S. $2.2 million using the
real
/U.S. dollar exchange
rate at June 1, 2003).
Social Security Proceedings
The Company is involved in several administrative and judicial proceedings
regarding social security disputes, which in May 2003 totaled R$62.3 million
(equivalent to U.S.$21.0 million using the
real
/U.S. dollar exchange rate at
May 31, 2003). The Company deposited approximately R$17.6 million (equivalent
to U.S.$5.9 million using the
real
/U.S. dollar exchange rate at May 31, 2003)
of this amount with the court. The Company has not established a provision in
respect of these proceedings in its balance sheet, and the
Instituto Nacional
de Seguro Social
(the National Social Security Institute, or INSS) does not
allow the payment of social security debts in installments.
Exemption of Income Tax
Copene was exempt from income tax in respect of sales of basic
petrochemical products and Utilities until the year ended December 31, 2001.
This tax exemption was instituted as part of a policy to benefit industrial and
other economic activities conducted in the Northeast of Brazil in an effort to
develop that region.
Based on Provisional Measure – MP number 2199-14/2001, the Company filed
with the Northeast Development Agency (SUDENE) a request for a 75% income tax
rate reduction as from January 1, 2002 in respect of income from sales of basic
petrochemicals and Utilities. The request was rejected, but the Company
obtained a Declaration from the National Integration Ministry authorizing a
reduction of 37.5% for the calendar years of 2002 and 2003 (an effective tax
rate of 15.62%), 25% from 2004 to 2008 (an effective tax rate of 18.75%) and
12.5% from 2009 to 2013 (an effective tax rate of 21.87%). This declaration is applicable to the
Company's DMT sales as well.
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Dividends And Dividend Policy
Dividends
The following table sets forth the dividends paid to holders of Braskem's
Common Shares and Preferred Shares since 1998 in U.S. dollars translated from
reais
at the Commercial Rate in effect as of the date of payment.
Nominal Brazilian Currency per 1,000
U.S.$ equivalent per 1,000
First
Preferred
Preferred
Preferred
Preferred
Payment
Common
Class A
Class B
Common
Class A
Class B
Year
Date
Shares
Shares
Shares
Shares
Shares
Shares
1998
February 10, 1998
R$
12.50
R$
12.50
R$
9.40
11.097301
11.097301
8.345170
May 7, 1998
R$
10.40
R$
10.40
R$
10.40
9.082176
9.082176
9.082176
August 5, 1998
R$
10.70
R$
10.70
R$
10.70
9.168023
9.168023
9.168023
November 5, 1998
R$
10.30
R$
10.30
R$
10.30
8.651827
8.651827
8.651827
1999
February 10, 1999
R$
10.20
R$
10.20
R$
10.20
5.381734
5.381734
5.381734
May 12, 1999
R$
10.40
R$
10.40
R$
10.40
6.259781
6.259781
6.259781
August 17, 1999
R$
10.40
R$
10.40
R$
10.40
5.526036
5.526036
5.526036
November 18, 1999
R$
10.40
R$
10.40
R$
10.40
5.391395
5.391395
5.391395
2000
February 22, 2000
R$
17.20
R$
17.20
R$
10.40
9.649369
9.649369
5.834502
May 23, 2000
R$
17.20
R$
17.20
R$
17.20
9.278740
9.278740
9.278740
August 22, 2000
R$
17.20
R$
17.20
R$
17.20
9.466674
9.466674
9.466674
November 21, 2000
R$
17.20
R$
17.20
R$
7.17
9.005236
9.005236
3.753927
2001
February 20, 2001
R$
17.20
R$
17.20
(1
)
8.572995
8.572995
(1
)
May 20, 2001
R$
11.50
R$
11.50
R$
11.50
5.013000
5.013000
5.013000
August 20, 2001
R$
11.50
R$
11.50
R$
11.50
4.544000
4.544000
4.544000
November 20, 2001
R$
11.50
R$
11.50
R$
11.50
4.674000
4.674000
4.674000
2002
February 25, 2002
(1
)
R$
7.07
R$
7.07
(1
)
2.938000
2.93800
May 20 2002
(1
)
R$
10.40
R$
10.40
(1
)
4.195748
4.195748
(1)
Braskem did not pay dividends for these classes of shares on these dates.
Reserves and Distributions
The discussion below summarizes the main provisions of the Brazilian
Corporate Law regarding the establishment of reserves by corporations and rules
with respect to the distribution of dividends, including provisions regarding
interest attributed to shareholders' equity.
Calculation of Distributable Amount
At each annual shareholders' meeting, the Board of Directors is required
to recommend how to allocate the Company's net profits for the preceding fiscal
year. Such allocation is subject to approval by the Company's shareholders.
The Brazilian Corporate Law defines "net profits" for any fiscal year as net
income after income taxes and social contribution taxes for such fiscal year,
net of any accumulated losses from prior fiscal years and any amounts allocated
to employees' and management's participation in the Company's net profits in
such fiscal year. In accordance with the Brazilian Corporate Law, an amount,
known as the distributable amount, equal to half of the Company's net profits,
as further reduced by amounts allocated to a legal reserve or a contingency
reserve, and increased by any reversals of reserves constituted in prior
years, will be available for dividend distributions or payment of interest on
shareholders' equity in any particular year. The Company may also establish
discretionary reserves, contingency reserves, reserves for investment projects,
an unrealized income reserve and tax incentive investment reserves, as
discussed below.
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The Brazilian Corporate Law provides that all discretionary allocations of
net profits, including any discretionary reserves, a contingency reserve, an
unrealized income reserve and a reserve for investment projects, are subject to
approval by the shareholders voting at the annual shareholders' meeting and may
be transferred to shareholders' equity or used for the payment of distributions
in subsequent years. The tax incentive investment reserve and the legal
reserve are also subject to approval by the shareholders voting at the annual
shareholders' meeting and may be transferred to capital or used to absorb
losses but are not available for the payment of distributions in subsequent
years.
The Company's calculation of net profits and allocations to reserves for
any fiscal year are determined on the basis of financial statements prepared in
accordance with the Brazilian Corporate Law. The Company's consolidated
financial statements included herein have been prepared in accordance with U.S.
GAAP, and although the Company's allocations to reserves and distributions will
be reflected in these financial statements, investors will not be able to
calculate such allocations or mandatory distributable amounts from these
consolidated financial statements.
Reserve Accounts
Legal Reserve Account.
Under the Brazilian Corporate Law and the
Company's bylaws, the Company is required to maintain a legal reserve to which
the Company must allocate 5% of its net profits for each fiscal year until the
aggregate amount of the reserve equals 20% of the Company's paid-in capital.
However, the Company is not required to make any allocations to the Company's
legal reserve in a fiscal year in which the legal reserve, when added to the
Company's other established capital reserves, exceeds 30% of the Company's
total capital.
Discretionary Reserve Accounts.
Under the Brazilian Corporate Law, the
Company is permitted to provide for the allocation of part of the Company's net
profits to discretionary reserve accounts that may be established in accordance
with the Company's bylaws. While the Company's bylaws do not currently provide
for any discretionary reserves, the Company's shareholders may amend the
Company's bylaws in order to establish one or more discretionary reserves. The
allocation of the Company's net profit to discretionary reserve accounts may
not be made if it serves to prevent the distribution of the mandatory
distribution.
Contingency Reserve Account.
Under the Brazilian Corporate Law, a
percentage of the Company's net profits may be allocated to a contingency
reserve for anticipated losses that are deemed probable in future years. Any
amount so allocated in a prior year either must be reversed in the fiscal year
in which the loss had been anticipated if the loss does not occur as projected
or charged off in the event that the anticipated loss occurs.
Reserves for Investment Projects.
Under the Brazilian Corporate Law, a
portion of the Company's net profits may be allocated to a reserve for
investment projects based on a capital expenditure budget previously presented
by the Company's management and approved by the Company's shareholders. Under
Brazilian Corporate Law, if a project relating to this approved capital
expenditure budget has a term exceeding one year, the budget relating to the
project must be re-submitted to the annual shareholders' meeting each fiscal
year until the relevant investment has been completed. After completion of a
relevant capital investment project, the Company may retain the reserve
allocated for such project until the shareholders vote to transfer all or a
portion of such reserve to capital or to retained earnings. The allocation of
the Company's net profits to investment project reserve accounts may not be
made if it serves to prevent the distribution of the mandatory distribution.
Unrealized Income Reserve Account.
Under Brazilian Corporate Law, as of
March 1, 2002 the amount by which the distributable amount exceeds the
"realized" net profits for any particular year may be allocated to an
unrealized income reserve account. The Brazilian Corporate Law defines
"realized" net profits as the amount by which the Company's net profits exceed
the sum of (1) the Company's net positive results, if any, from the equity
method of accounting for earnings and losses of the Company's subsidiaries and
certain of its affiliates and (2) the profits, gains, or returns obtained from
transactions taking place after the end of a fiscal year.
The unrealized income reserve account must be used for the payment of the
mandatory distribution.
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Tax Incentive Investment Reserves.
Under Brazilian tax laws, a portion of
net profits also may be allocated to a general "tax incentive investment
reserve" in amounts corresponding to reductions in the Company's income tax
generated by credits for particular government approved investments. The
reserve is available only in connection with the acquisition of capital stock
of companies undertaking specific government approved projects. See "Dividend
Preference of Preferred Shares."
Mandatory Distributions.
The bylaws of a Brazilian corporation may
specify a minimum percentage of the distributable amount that must be
distributed to shareholders as dividends or interest on shareholders's equity,
also known as the mandatory distributable amount. Under the Company's bylaws,
the mandatory distributable amount is 25% of the distributable amount, after
any allocations to any legal reserve, contingency reserve, reserve for
investment projects, unrealized income reserve or tax incentive investment
reserve. See "—Calculation of Distributable Amount."
In addition to the mandatory distributable amount, the Board of Directors
may recommend that the shareholders approve the payment of additional
distributions from other funds legally available for distribution.
Distributions made to holders of the Company's preferred shares are computed in
determining whether the Company has paid the mandatory distribution. Any
payment of interim distributions is netted against the amount of the mandatory
distribution for that fiscal year.
While the Brazilian Corporate Law requires the mandatory distribution to
be paid in every fiscal year, the Brazilian Corporate Law permits companies to
suspend the mandatory distribution if the Board of Directors report to the
annual shareholders' meeting that the distribution would be incompatible with
the Company's financial condition. Any suspension of the mandatory
distribution must be approved by the Fiscal Council. In addition, management
of companies with publicly traded securities, including the Company, also must
submit a report setting out the reasons for the suspension to the CVM. Net
profits not distributed by virtue of a suspension are allocated to a special
reserve and, if not absorbed by subsequent losses, are required to be
distributed as soon as the financial condition of the company permits such
payments. The Company's dividend distribution policy included the distribution
of periodic dividends, based on quarterly balance sheets approved by the Board
of Directors. However, since the first quarter of 2002, the Board of Directors
has recommended that payment of the mandatory distribution be suspended in
light of the Company's results of operations.
Payment of Dividends and Interest on Shareholders' Equity
The mandatory distribution may be made in the form of dividends or
interest attributable to shareholders' equity, which is equivalent to a
dividend but may be deducted by the Company in calculating its income tax
provisions.
Dividends.
The Company is required by the Brazilian Corporate Law and by
the Company's bylaws to hold an annual shareholders' meeting by no later than
April 30 of each year at which, among other decisions, the shareholders may
vote to declare an annual dividend. The payment of annual dividends is based
on the audited financial statements prepared for the immediately preceding
fiscal year.
Any holder of record of shares at the time that a dividend is declared is
entitled to receive dividends. Under the Brazilian Corporate Law, dividends
are generally required to be paid within 60 days following the date on which
the dividend is declared, unless the shareholders' resolution establishes
another date of payment, which, in any case, must occur prior to the end of the
fiscal year in which the dividend is declared.
A shareholder has a three-year prescription period from the date of the
dividend payment to claim dividends or interest payments with respect to its
shares, after which the aggregate amount of any unclaimed dividends legally
reverts to the Company. The Company is not required to adjust the amount of
the dividend payment for any inflation that occurs during the period from the
date of declaration to the payment date.
The Board of Directors may declare interim dividends based on the accrued
profits recorded or the realized profits in the Company's annual or semi-annual
financial statements approved by the Company's shareholders. In addition, the
Company may pay dividends from the net income based on the Company's unaudited
quarterly financial statements. These quarterly interim dividends may not exceed
the amounts accounted for in the Company's capital reserve accounts. Any
payment of interim dividends may be set off against the amount of mandatory
distributions relating to the net profit earned in the year in which the
interim dividends were paid.
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Interest on Shareholders' Equity.
Since January 1, 1996, Brazilian
companies have been permitted to pay limited distributions to holders of equity
securities and treat such payments as a deductible expense for calculation of
Brazilian income tax and since 1998, for calculation of social contribution
tax. In accordance with Law No. 9,249 dated December 26, 1995, as amended, the
Company's bylaws permit the distribution of interest on shareholders' equity as
an alternative form of payment of distributions to shareholders. The interest
rate applied to these distributions generally cannot exceed the Brazilian
long-term interest rate, or TJLP, for the applicable period. The amount of
interest paid that can be deducted for tax purposes cannot exceed the greater
of:
•
50% of net income (after the deduction of the provision of social
contribution tax and before the deduction of the corporate income tax
provision) before taking into account any such distribution for the
period in respect of which the payment is made; or
•
50% of the sum of retained earnings and profit reserves.
For accounting purposes, although the interest charge must be included as
a financial expense in the income statement to be tax-deductible, the interest
charge is reversed before calculating net income in the income statement and is
deducted from shareholders' equity like a dividend.
Any payment of interest on shareholders' equity to holders of ADSs or
common shares, whether or not they are Brazilian residents, is subject to
Brazilian withholding tax at the rate of 15%, provided that a 25% withholding
tax rate applies if the person receiving this interest is a resident of a tax
haven jurisdiction (
i.e.
, a country that does not impose income tax or that
imposes it at a maximum rate lower than 20%). See "—Brazilian Tax
Considerations." Under the Company's bylaws, the amount distributed to
shareholders as interest on shareholders' equity, net of any withholding tax,
may be included as part of the mandatory distribution.
Dividend Preference of Preferred Shares
Pursuant to the Company's bylaws, holders of preferred shares are entitled
to a minimum annual non-cumulative preferential dividend equal to 6% of their
pro rata
share of the Company's paid-in capital prior to dividends payable to
holders of common shares. To the extent that the Company declares a dividend
in an amount that exceeds the preferential dividend due to holders of
preferred shares, and after holders of common shares have received
distributions equivalent, on a per share basis, to the preferential dividend
payable to preferred shares, holders of common shares and of class A preferred
shares are entitled to receive the same additional dividend amount per share.
After holders of class B preferred shares have received distributions
equivalent, on a per share basis, to the preferential dividend payable to such
shares, holders of class B preferred shares shall not be entitled to receive
additional dividend amounts, in compliance with Law
No. 10,303/2001 and Decree-Law nº
1,376/74, which regulates the creation of investment funds and fiscal incentive
programs in the Northeast of Brazil.
Significant Changes
Other than as otherwise disclosed in this annual report, no significant
change has occurred since the date of the Consolidated Financial
Statements included in this annual report.
ITEM 9.
THE OFFER AND LISTING
Markets for the Company's Equity Securities
The principal trading market for Braskem's Common Shares and Preferred
Class A and B Shares is the BOVESPA. Braskem's Common Shares and the Preferred
Class A Shares began trading on the BOVESPA on November 11, 1980 and the
Preferred Class B Shares on August 19, 1983.
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At December 31, 2002, there were an aggregate of 2,160,764,336 Preferred
Class A Shares (including 54,620,037 treasury shares owned or held by or for
the account of the Company), 11,457,740 Preferred Class B Shares and
1,226,091,148 Common Shares issued and outstanding and Braskem had
approximately 5,000 shareholders. As of December 31, 2002, the number of U.S.
resident holders of Braskem's Preferred Class A Shares, Preferred Class B
Shares and Common Shares was approximately 33, 0 and 2, respectively. As of
December 31, 2002, there were 10,608,395 Common Shares, 208,095,399 Preferred
Class A Shares, and 0 Preferred Class B Shares held by foreign investors.
Braskem has registered one class of American Depositary Shares ("ADSs") on
Form F-6 pursuant to the Securities Act. One ADS evidenced by American
Depositary Receipts ("ADRs") represents 50 Preferred Class A Shares without par
value.
The ADSs of Copene, the Company's predecessor, were traded in the U.S. as
Level I ADRs, under the symbol "CPEPY" beginning in January 1993. On December
21, 1998, Copene's ADRs began trading on the New York Stock Exchange ("NYSE"),
with Citibank N.A. as depositary bank. On October 8, 2002, following the
change to its present name, Braskem was invited by the NYSE to be present at
the so-called "Opening Bell Ceremony" at the start of the Company's ADRs Level
II trading in New York under the new ticker symbol "BAK." On December 31,
2002, there were 2,161,346 Preferred Class A ADRs outstanding, representing
108,067,300 Preferred Class A Shares or approximately 5% of Braskem's
outstanding Preferred Class A Shares.
Price History of the Company's Stock
The tables below set forth the high and low closing sales prices for the
Preferred Class A Shares on the BOVESPA and the equivalent high and low closing
sales prices for the Preferred Class A ADRs in U.S. dollars for the periods
indicated.
Annual High and Low Market Prices
U.S. dollars per 50
U.S. dollars per Preferred
Preferred Class A Shares
(1)
Class A ADRs
High
Low
High
Low
1998
U.S.$17.72
U.S.$3.65
U.S.$16.53
U.S.$4.98
1999
16.32
3.65
16.19
3.68
2000
22.40
14.17
22.88
14.19
2001
18.07
5.87
17.88
6.14
2002
12.76
2.66
12.75
2.57
Quarterly High and Low Market Prices
U.S. dollars per 50
U.S. dollars per Preferred
Preferred Class A Shares
(1)
Class A ADRs
High
Low
High
Low
2000
First Quarter
U.S.$19.97
U.S.$14.26
U.S.$20.13
U.S.$14.50
Second Quarter
19.70
14.17
19.50
14.19
Third Quarter
22.40
19.34
22.88
18.88
Fourth Quarter
20.43
14.59
20.38
14.63
2001
First Quarter
18.07
14.01
17.88
14.05
Second Quarter
13.96
10.46
14.10
10.40
Third Quarter
12.90
5.87
13.00
6.20
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Quarterly High and Low Market Prices
U.S. dollars per 50
U.S. dollars per Preferred
Preferred Class A Shares
(1)
Class A ADRs
High
Low
High
Low
Fourth Quarter
U.S.$9.99
U.S.$6.05
U.S.$10.02
U.S.$6.14
2002
First Quarter
12.76
10.34
12.75
10.05
Second Quarter
11.96
6.72
11.77
6.09
Third Quarter
7.09
2.98
7.11
3.18
Fourth Quarter
3.49
2.66
3.50
2.57
2003
First Quarter
3.76
2.22
4.10
2.20
Monthly High and Low Market Prices
U.S. dollars per 50
U.S. dollars per Preferred
Preferred Class A Shares
(1)
Class A ADRs
High
Low
High
Low
December 2002
U.S.$3.47
U.S.$2.63
U.S.$3.50
U.S.$2.57
January 2003
3.76
2.64
4.10
2.52
February 2003
2.60
2.22
2.60
2.20
March 2003
2.99
2.47
3.20
2.45
April 2003
5.16
3.94
5.71
3.35
May 2003
7.21
5.61
7.20
5.50
(1)
U.S. dollar amounts are translated from Brazilian
reais
at the Commercial
Market Rates in effect on the date of the corresponding Brazilian currency
quotation for Preferred Class A Shares. Such U.S. dollar amounts may
reflect exchange rate fluctuations and may not correspond to changes in
nominal
reais
prices over time.
On December 31, 2002, the closing sales price of the (1) the Preferred
Class A Shares on the BOVESPA was U.S.$3.11 per 50 shares and (2) the Preferred
Class A ADRs on the NYSE was U.S.$3.30 per Preferred
Class A ADR. See "Item 3. Key
Information – Selected Financial Data – Exchange Rates" for additional
information on the applicable exchange rates during the periods indicated
above.
Trading on the Brazilian Stock Exchanges
Braskem's shares are trade on the BOVESPA, which is the most significant
stock exchange in Brazil. On January 27, 2000, the BOVESPA and the Rio de
Janeiro Stock Exchange announced an agreement that led to the unification of
the Brazilian securities market under the management of the BOVESPA.
Trading on each Brazilian stock exchange is limited to member brokerage
firms and a limited number of authorized non-members. The BOVESPA has one open
outcry trading session each day, from 10:00 a.m. to 5:00 p.m. Trading is also
conducted during this time on an automated system called
Sistema de Negociação
Assistida por Computador
, or CATS. The CVM and each of the Brazilian stock
exchanges have discretionary authority to suspend trading in shares of a
particular issuer under certain circumstances. Off-exchange trading may be
effected in certain circumstances, although such trading is very limited.
Settlement of transactions is effected three business days after the trade
date without any adjustment for inflation. Payment for shares is made through
the facilities of the BOVESPA's clearinghouse,
Companhia Brasileira de
Liquidação e Custódia
("CLBC"). The seller is ordinarily required to deliver
the shares to the exchange on the second business day following the trade date.
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In order to better control volatility, the BOVESPA adopted a "circuit
breaker" system pursuant to which trading sessions may be suspended for a
period of 30 minutes or one hour whenever the BOVESPA share index falls more
than 10% or 15%, respectively, in relation to the index registered in the
previous trading session.
The BOVESPA is less liquid than the New York Stock Exchange or of many
other of the world's major stock exchanges. As of December 31, 2002, according
to information provided by BOVESPA, the aggregate market capitalization of the
407 companies listed on the BOVESPA was equivalent to approximately U.S.$124.04
billion, and the 10 largest companies listed on BOVESPA represented
approximately 46% of the total market capitalization of all listed companies.
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 small groups
of controlling persons, by governmental entities or by one principal
stockholder. As of December 31, 2002, approximately 21.6% of the market
capitalization of all listed companies on the BOVESPA was controlled, directly
or indirectly, by the Brazilian government. At December 31, 2002, Braskem's
preferred class A shares posted a closing price of R$11.00 per 50 shares, 46% less than the
closing price for December 31, 2001. During 2002, Braskem's securities were
traded on all the days that the BOVESPA was open. The closing price for
Braskem's Level II ADRs was 72% less in 2002, ending the year at U.S.$3.30.
Trading on Brazilian stock exchanges by a holder not deemed to be
domiciled in Brazil for Brazilian tax and regulatory purposes (a "non-Brazilian
holder") is subject to certain limitations under Brazilian foreign investment
legislation. With limited exceptions, non-Brazilian holders may only trade on
the BOVESPA in accordance with the requirements of Resolution No. 2,689 of
January 26, 2000 of the
Conselho Monetário Nacional
(the "National Monetary
Council"). Resolution No. 2,689 requires that securities held by non-Brazilian
holders be maintained in the custody of, or in deposit accounts with, financial
institutions duly authorized by the Central Bank and the CVM. In addition,
Resolution No. 2,689 requires non-Brazilian holders to restrict their
securities trading to transactions on the BOVESPA or qualifed over-the-counter
markets. With limited exceptions, non-Brazilian holders may not transfer the
ownership of investments made under Resolution No. 2,689 to other non-Brazilian
holders through a private transaction. See "Item 10. Additional Information – Exchange
Controls."
Regulation of Brazilian Securities Markets
The Brazilian securities markets are regulated by the CVM, which has
authority over stock exchanges and the securities markets generally, and by the
Central Bank, which has, among other powers, licensing authority over brokerage
firms and regulates foreign investment and foreign exchange transactions. The
Brazilian securities market is governed by Law No. 6,385 dated December 7,
1976, as amended ("the Brazilian Securities Law") and the
Brazilian Corporate
Law.
Under
the Brazilian Corporate Law, a company is either public, a
"
companhia aberta,
" such as Braskem, or private, a "
companhia fechada.
" All
public companies are registered with the CVM and are subject to periodic
reporting requirements. A company registered with the CVM may have its
securities traded on the Brazilian stock exchanges or in the Brazilian
over-the-counter market (the "Brazilian OTC Market"). The shares of a listed
company, including Braskem, also may be traded privately subject to certain
limitations.
The Brazilian OTC Market consists of direct trades between persons in
which a financial institution registered with the CVM serves as intermediary.
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 must
receive notice of all trades carried out in the Brazilian OTC Market by the
respective intermediaries.
Trading of a company's securities on the Brazilian stock exchanges may be
suspended at the request of a company prior to its making a material
announcement if the company requests and obtains the same suspension for
trading on any international stock exchange. Trading may also be suspended by a
Brazilian stock exchange or the CVM, among other reasons, based on or due to a
belief that a company has provided inadequate information regarding a material
event or has provided inadequate responses to the inquiries by the CVM or the
relevant stock exchange.
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The Brazilian Securities Law provides for, among other things, disclosure
requirements, restrictions on insider trading and other forms of price
manipulation and protections for minority shareholders. However, the
Brazilian securities markets are not as highly regulated and supervised as the
United States securities markets or markets in certain other jurisdictions.
ITEM 10. ADDITIONAL INFORMATION
Description of the Company's Bylaws
Set forth below is a summary of certain significant provisions of the
Company's bylaws and of the Brazilian Corporate Law. In Brazil, the company's
bylaws (
Estatuto Social
) is the principal governing document of a corporation.
This description does not purport to be complete and is qualified in its
entirety by reference to the Brazilian Corporate Law and the Company's bylaws.
An English translation of the Company's bylaws has been filed herewith.
Information on the trading market for the Company's preferred shares is set
forth under "Item 9. The Offer
and Listing—Principal Market and Trading Market Price Information" and
information on ownership of the Company's shares is set forth under "Item 7.
Major Shareholders and Related Party Transactions—Major Shareholders."
General
The Company's registered name is Braskem S.A., and the Company's
registered office is located in the Municipality of Camacari, State of Bahia,
Brazil. The Company's registration number with the Brazilian Commercial
Registry is 42.150.391/0001-70. The Company is duly registered with the CVM
under No. 4820. The Company's principal place of business is in the City of
São Paulo, Brazil.
Company Objects and Purposes
Article 2 of the Company's bylaws establishes the Company's corporate purposes to include:
•
the manufacture, trading, import and export of chemical and petrochemical products;
•
production of utilities for use by component companies of the
Northeastern Complex, including the supply of steam, water, compressed
air, industrial gases, electricity, as well as the provision of various
services to these companies;
•
the holdings of equity stakes (quotas or shares) in other
companies; and
•
the manufacture, distribution, sale, import and export of gasoline,
diesel oil, liquified petroleum gas and other oil derivatives.
Board of Directors
In accordance with the Brazilian Corporate Law, any matters subject to the
approval of the Board of Directors can be approved by a simple majority of
votes of the members present at a duly convened meeting, unless the Company's
bylaws otherwise specify. Pursuant to the Company's bylaws, the Board of
Directors may only deliberate if a majority of its members are present at a
duly convened meeting. Any resolutions of the Board of Directors may be
approved by the affirmative vote of a majority of the members present at the
meeting.
Election of Directors; Fiduciary Duties
In accordance with the provisions of the Controlling Shareholders
Agreement, the majority of the members of the Board of Directors are elected by
the Odebrecht Group. All members of the Board of Directors owe fiduciary
duties towards the Company and all of its shareholders. In addition, any
director appointed by a shareholder pursuant to a shareholders agreement is
also bound by the terms of such agreement. See "Item 7. Major Shareholders
and Related Party Transactions—Shareholders Agreements."
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Qualification of Directors
The Brazilian Corporate Law requires members of a company's board of
directors to be the shareholders of the company, but there is no minimum share
ownership or residency requirement for qualification as a director. The
Company's bylaws do not require the members of the Board of Directors to be
resident in Brazil. Brazilian Corporate Law requires the Company's executive
officers to reside in Brazil.
Conflicts of Interest
Under the Brazilian Corporate Law, if a director or an executive officer
has a conflict of interest with the Company in connection with any proposed
transaction, the director or executive officer may not vote in any decision
of the Board of Directors or of the Board of Executive Officers, as the
case may be, regarding such transaction and must disclose the nature and extent
of his conflicting interest for inclusion in the minutes of the meeting.
Any transaction in which a director or executive officer may have an
interest, including any borrowings, can only be approved on reasonable or fair
terms and conditions that are no more favorable than the terms and conditions
prevailing in the market or offered by third parties. If any such transaction
does not meet this requirement, then the Brazilian Corporate Law provides that
the transaction may be nullified and the interested director or executive
officer must return to the Company any benefits or other advantages that he
obtained from, or as result of, such transaction. In accordance with the
Brazilian Corporate Law and upon the request of a shareholder that owns 5% or
more of the Company's total capital stock, directors and executive officers
must reveal to the shareholders at an ordinary meeting of the shareholders
certain transactions and circumstances that may give rise to a conflict of
interest.
Compensation
Under the Company's bylaws, the Company's common shareholders approve the
aggregate compensation payable to directors and executive officers. Subject to
this approval, the Board of Directors establishes the compensation of its
members and of the executive officers. See "Item 6. Directors and Senior
Management – Compensation."
Mandatory Retirement
Neither the Brazilian Corporate Law nor the Company's bylaws establish any
mandatory retirement age for directors or executive officers.
Capital Stock
Under the Brazilian Corporate Law, the number of issued non-voting shares
or shares with limited voting rights, such as the Company's issued preferred
shares, may not exceed 50% of the total number of issued shares. Prior to the
Brazilian Corporate Law taking effect, the limit of the number of issued
non-voting shares was 66.6% of the total number of issued shares. Companies
seeking to register with the CVM for the first time are required to observe the
new percentage limitation. Companies with an existing CVM registration may
mantain the proportion between common shares and preferred shares existing as
of March 1, 2002 or they may elect one of the following two options, which will
not result in appraisal rights for minority shareholders:
•
issue additional common shares up to the amount necessary to meet the required proportion; or
•
repurchase preferred shares from the shareholders.
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Each common share entitles its holder to one vote at annual and
extraordinary shareholders' meetings. Holders of common shares are not
entitled to any preference in respect of the Company's dividends or other
distributions or otherwise in case of the Company's liquidation.
The Company's preferred class A shares and preferred class B shares are
non-voting, except under limited circumstances, and have priority over the
Company's common shares in the case of the Company's liquidation. See "—Voting
Rights" for more information regarding the voting rights of the Company's
preferred shares, "—Reserves and Distributions—Dividend Preference of Preferred
Shares" for more information regarding the distribution preferences of the
Company's preferred shares, and "—Liquidation" for more information regarding
the liquidation preferences of the Company's preferred shares.
Shareholders' Meetings
The Company's shareholders have the power to determine any matters related
to changes in the Company's corporate purposes and to pass any resolutions they
deem necessary to protect and enhance the development of the Company.
Pursuant to the Brazilian Corporate Law, shareholders have the power,
among other powers, to vote at shareholders' meetings to:
•
amend the Company's bylaws;
•
elect or dismiss members of the Board of Directors and members of
the Fiscal Council at any time, subject to the right of the Company's
preferred shareholders to elect or dismiss one member of the Board of
Directors and of the Fiscal Council;
•
accept or reject financial statements approved by the Board of
Directors, including the allocation of net profits and the
distributable amount for payment of the mandatory distribution and
allocations to the various reserve accounts;
•
approve any capital increase in excess of the amount of the authorized capital;
•
approve any capital reduction;
•
accept or reject the valuation of assets contributed by a
shareholder in consideration for issuance of capital stock;
•
suspend the rights of any shareholder in default of obligations
established by law or by the Company's bylaws;
•
authorize the issuance of convertible debentures;
•
approve the: reorganization of the Company's legal form; or the
merger, consolidation or split-off of the Company; authorize the
dissolution and liquidation of the Company and the election and
dismissal of liquidators appointed in connection therewith and examine
their accounts;
•
participate in a centralized group of companies;
•
approve the disposition of the control of any of the Company's subsidiaries;
•
approve the disposition of any convertible debentures issued by the
Company's subsidiaries and held by the Company;
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•
waive the right to subscribe to shares or convertible debentures
issued by the Company's subsidiaries or affiliates;
•
approve the aggregate compensation payable to the Company's
directors and executive officers;
•
approve the cancellation of the Company's registration as a
publicly-traded company and in such cases, to select an experienced
company to prepare the appraisal of the economic value of the Company's
shares; and
•
authorize management to declare the Company insolvent and to
request a
concordata
(a procedure involving protection of the Company
from its creditors similar in nature to a reorganization under the U.S.
Bankruptcy Code).
The Company convenes its shareholders' meetings, including the annual
shareholders' meeting, by publishing a notice in the
Diário Oficial do Estado
da Bahia
and in at least two additional newspapers designated by the
shareholders with general circulation in Bahia, where the Company maintains its
registered office. The notice must be published no fewer than three times,
beginning at least 15 calendar days prior to the scheduled meeting date. The
notice must contain the meeting's agenda and, in the case of a proposed
amendment to the bylaws, an indication of the subject matter of the proposed
amendment. For ADS holders, the Company is required to provide notice to the
Depositary for distribution to ADS holders at least 30 calendar days prior to a
shareholders' meeting.
Annual shareholders' meetings must be held by April 30 of each year. The
Board of Directors may convene a shareholders' meetings. In addition, under
the Brazilian Corporate Law, shareholders' meetings may also be convened by the
Company's shareholders as follows:
•
by any shareholder if, under certain circumstances set forth in the
Brazilian Corporate Law, the directors do not convene a shareholders'
meeting within 60 days;
•
by the shareholders of not less than 5% of the Company's total
capital stock if, after a period of eight days, the directors fail to
call a shareholders' meeting that has been requested by such
shareholders; and
•
by the shareholders of not less than 5% of either the Company's
total voting capital stock or the Company's total non-voting capital
stock, if after a period of eight days, the directors fail to call a
shareholders' meeting for the purpose of appointing a Fiscal Council that has
been requested by such shareholders.
Each shareholders' meeting is presided over by a President and Secretary
elected by the shareholders present at the meeting. An extraordinary
shareholders' meeting may be held whenever the interests of the Company so
require. A shareholder may be represented at a shareholders' meeting by an
attorney-in-fact appointed by the shareholders not more than one year before
the meeting. The attorney-in-fact must be a shareholder, an officer of the
Company, a lawyer or a financial institution, and the power of attorney
appointing the attorney-in-fact must comply with certain formalities set forth
by Brazilian law.
In order for a valid action to be taken at a shareholders' meeting,
shareholders representing at least one quarter of the Company's issued and
outstanding common shares must be present. However, shareholders representing
at least two-thirds of the Company's issued and outstanding common shares must
be present at a shareholders' meeting to amend the Company's bylaws. If a
quorum is not present, the Board of Directors may call a second meeting by
publishing a notice as described above at least five calendar days prior to the
scheduled meeting. The quorum requirements do not apply to the second meeting,
subject to the voting requirements for certain matters described below. A
shareholder without a right to vote may attend a shareholders' meeting and take
part in the discussion of matters submitted for consideration.
Voting Rights
Pursuant to the Brazilian Corporate Law and the Company's bylaws, each of
the Company's common shares carries the right to vote at a shareholders'
meeting. Preferred shares generally do not confer voting rights,
except as described below. The Company may not restrain or deny any voting rights
without the consent of the majority of the shares affected. Whenever the
shares of any class of capital stock are entitled to vote, each share is
entitled to one vote.
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Except as otherwise provided by law, resolutions of a shareholders'
meeting are passed by a simple majority vote of the holders of the common stock
of the Company present or represented at the meeting, without taking
abstentions into account. Under the Brazilian Corporate Law, the approval of
shareholders representing at least a majority of the issued and outstanding
voting shares is required for the types of action described below, as well as,
in the case of the first and second bullet points, a majority of issued and
outstanding shares of the affected class:
•
creating a new class of preferred shares or disproportionately
increasing an existing class of preferred shares relative to the other
classes of preferred shares, other than to the extent permitted by the
bylaws, which
permit the Company to modify the proportion between the various classes
of the Company's preferred shares;
•
changing a priority, preference, right, privilege or condition of
redemption or amortization of any class of preferred shares or creating
a new class of preferred shares that has a priority, preference, right,
condition or redemption or amortization superior to an existing class
of preferred shares;
•
reducing the mandatory distribution;
•
changing the corporate purpose;
•
merging the Company with another company, or consolidating or
splitting the Company, subject to the conditions set forth in the
Brazilian Corporate Law;
•
transferring all of the shares of the Company to another company,
known as
incorporação de ações
;
•
participating in a centralized group of companies as defined under
the Brazilian Corporate Law and subject to the conditions set forth
therein; and
•
dissolving or liquidating the Company or canceling any ongoing
liquidation of the Company.
Decisions on the Company's transformation into another form of company
require the unanimous approval of the Company's shareholders, including the
preferred shareholders.
Brazilian Corporate Law requires that the President of any shareholders'
meeting shall disregard any vote taken that violates the provisions of any
shareholders' agreement if that shareholders' agreement has been duly filed
with the Company.
Under the Brazilian Corporate Law, neither the Company's bylaws nor
actions taken at a shareholders' meeting may deprive a shareholder of certain
specific rights, including:
•
the right to participate in the distribution of profits;
•
the right to participate equally and ratably in any remaining
residual assets in the event of liquidation of the Company;
•
the right to supervise the management of the corporate business as
specified in the Brazilian Corporate Law;
•
the right to preemptive rights in the event of an issuance of
shares, debentures convertible into shares or subscription bonuses
(other than with respect to a public offering of such securities, as
may be set out in the bylaws); and
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•
the right to withdraw from the Company under the circunstances
specified in the Brazilian Corporate Law.
Voting Rights of Minority Shareholders
Under the Brazilian Corporate Law, shareholders that are not controlling
shareholders, but that together hold either
•
preferred shares representing at least 10% of the total share capital of the Company, or
•
common shares representing at least 15% of the voting capital of the Company,
may separately appoint one member and an alternate to the Board of Directors at
the shareholders' meeting. If no group of common or preferred shareholders
meets the thresholds described above, shareholders holding preferred shares or
common shares representing at least 10% of the total share capital of the
Company are entitled to combine their holdings to appoint one member and an
alternate to the Board of Directors. The shareholders seeking to exercise
these minority rights must prove that they have held their shares for not less
than three months preceding the shareholders' meeting at which the Director
will be appointed. Until 2005, the director or directors appointed by the
preferred shareholders as a group, or collectively with the common
shareholders, are chosen from a list of three names prepared by the controlling
shareholder. Any directors appointed by the non-controlling shareholders have
the right to veto the selection of the Company's independent auditors.
In accordance with the Brazilian Corporate Law, preferred shareholders
together with common shareholders (excluding the controlling shareholders) are
entitled to a representative on the Fiscal Council, and one of the members of
the Fiscal Council and his alternate may be appointed and/or dismissed by
holders of common stock, other than the controlling shareholders, if such
holders collectively own not less than 10% of the common shares.
Shareholders holding shares representing not less than 10% of the shares
entitled to vote at the shareholders' meeting, or such smaller percentage
applicable according to a sliding scale determined by the CVM and based on the
total capital of the company, have the right to request that a cumulative
voting procedure be adopted. Under such procedure, each voting share shall
have as many votes as there are positions of directors to be filled, and each
shareholder may cast all of its votes for a single candidate or distribute them
among various candidates. If the cumulative voting procedure is adopted, the
controlling shareholders always retain the right to elect at least the same
numbers of members as the other shareholders plus one, independently of the
total number of directors. This procedure must be requested by the
shareholders at least 48 hours prior to the shareholders' meeting.
Voting Rights of the Preferred Shares
Holders of preferred shares are not entitled to vote on any matter except
with respect to the election of directors by holders of at least 10% of the
Company's preferred stock and in the limited circumstances provided below.
Under the Brazilian Corporate Law, preferred shareholders together with
common shareholders (excluding the controlling shareholders) will be entitled
to a representative on the Fiscal Council. Under the Company's bylaws one of
the members of the Fiscal Council and his or her alternate may be appointed
and/or dismissed by a majority vote of the holders of preferred shares.
The Brazilian Corporate Law and the Company's bylaws provide that
non-voting or restricted-voting shares, such as the Company's preferred shares,
acquire unrestricted voting rights beginning when a company has failed for
three consecutive fiscal years (or for any shorter period set forth in the
company's by laws) to pay any fixed or minimum dividend to which such shares
are entitled. This voting right shall continue until payment in full has been
made. The Company's bylaws do not set forth a shorter period. Preferred
shareholders also obtain the right to vote if the Company enters into a
liquidation process.
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Liquidation
The
Company shall be liquidated pursuant to the terms of Brazilian law. In the
event of an extrajudicial liquidation of the Company, a shareholders' meeting
shall determine the manner of liquidation and appoint the liquidator and the
Fiscal Council that will function during the liquidation period.
Upon liquidation, the Company's preferred shares have a preference over
the Company's common shares. In the event of a liquidation, the assets
available for distribution to the Company's shareholders would be distributed
first to the preferred shareholders in an amount equal to their
pro rata
share
of the legal capital of the company, prior to making any distributions to the
Company's common shareholders. If the assets to be so distributed are
insufficient to fully compensate the Company's preferred shareholders, the
preferred shareholders would each receive a
pro rata
amount (based on their
pro
rata
share of the legal capital of the Company excluding the common shares in
such calculation) of any available assets.
Conversion Rights
According to the Company's bylaws, the Company's preferred shares are not
convertible into common shares. However, the holders of class B preferred
shares are permitted by the Company's bylaws to convert such shares into class
A preferred shares. The ratio of any such conversion is two class B preferred
shares for each class A preferred share.
Preemptive Rights
Pursuant to the Brazilian Corporate Law, each of the Company's
shareholders has a general preemptive right to subscribe for shares or
securities convertible into shares in any capital increase, in proportion to
the number of shares held by such shareholder. However, pursuant to the
Company's bylaws, the holders of shares subscribed with using funds originating
from fiscal incentives provided under Law No. 6,404/76 do not have preemptive
rights. In the event of a capital increase that would maintain or increase the
proportion of capital represented by the preferred shares, holders of preferred
shares would have preemptive rights to subscribe to newly issued preferred
shares only. In the event of a capital increase that would reduce the
proportion of capital represented by the preferred shares, holders of preferred
shares would have preemptive rights to subscribe to any new preferred shares in
proportion to the number of shares that they hold, and to common shares only to
the extent necessary to prevent dilution of their interests in the Company's
total capital.
Under the Company's bylaws, except when issuing voting shares or
securities convertible into voting shares, the Board of Directors or the
shareholders', as the case may be, may decide not to extend preemptive rights
to the Company's shareholders with respect to any issuance of shares,
debentures convertible into shares or warrants made in connection with a public
exchange made to acquire control of another company or in connection with a
public offering.
The preemptive rights may be exercised for a period of at least 30 days
following the publication of notice of the issuance of securities convertible
into shares, and the right may be transferred. Under the Brazilian Corporate
Law, the Board of Directors may reduce the 30 day period for the exercise of
preemptive rights with respect to any issuance of shares, debentures
convertible into shares or warrants in connection with a public exchange made
to acquire control of another company or in connection with a public offering.
In the event of a capital increase that would maintain or increase the
proportion of capital represented by preferred shares, holders of ADSs will
have, except under the circumstances described above, preemptive rights to
subscribe to newly issued preferred shares. In the event of a capital increase
which would reduce the proportion of capital represented by preferred shares,
holders of ADSs will have preemptive rights to subscribe for preferred shares,
in proportion to their shareholdings, and for common shares to the extent
necessary to prevent dilution of their overall interest in the Company.
However, U.S. holders may not be able to exercise the preemptive rights
relating to the preferred shares underlying their ADSs unless a registration
statement under the Securities Act is effective with respect to those rights or
an exemption from the registration requirements of the Securities Act is
available.
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Redemption, Amortization, Tender Offers and Rights of Withdrawal
The bylaws of a company or the shareholders at a shareholders' meeting may
authorize the use of profits or reserves to redeem or amortize shares in
accordance with conditions and procedures established for such redemption or
amorization. The Brazilian Corporate Law defines redemption (
resgate de ações
)
as the payment of the value of the shares in order to permanently remove such
shares from circulation, with or without a corresponding reduction of the
company's total capital. The Brazilian Corporate Law defines amortization
(
amortização
) as the distribution to the shareholders, without a corresponding
capital reduction, of amounts that they would receive if the company were
liquidated. If an amortization has been effected, the shareholders who
received an amortization distribution will receive, upon the eventual
liquidation of the Company, a
pro rata
portion of any remaining capital after
the other shareholders that did not participate in the amortization transaction
receive the amount that they would have received had they received an
amortization distribution.
Brazilian Corporate Law authorizes the Company to redeem shares not held
by the controlling shareholder if, after a tender offer, the controlling
shareholder of the Company increases its participation in the total share
capital of the Company to more than 95%. The redemption price in such case
would be the same price paid for the shares in the tender offer.
In addition, the Brazilian Corporate Law and the Company's bylaws require
the Company to make a tender offer for shares held by minority shareholders
under certain circumstances described below, and permit dissenting shareholders
to withdraw their capital from the Company under certain circumstances
described below.
Mandatory Tender Offers
Brazilian Corporate Law requires that if the Company is delisted or there
is a substantial reduction in liquidity of the shares of the Company, as
defined by the CVM, in each case as a result of purchases by the controlling
shareholders of the Company, the controlling shareholders must effect a tender
offer for the remanining shares of the Company at a purchase price equal to the
fair value of the shares taking into account the total number of outstanding
shares.
Brazilian Corporate Law also requires any acquiror of direct or indirect
control of the Company to make a tender offer for the Company's remaining
common shares and preferred shares not owned by the acquiror, in each case, at
a price equal to 80% of the price per share paid for the controlling block of
shares. In addition, the Brazilian Corporate Law provides that public
companies, including the Company, must grant its preferred shareholders at
least one of the following three rights:
•
the right to participate in the distribution of the mandatory
distribution in accordance with the following criteria: (1) priority in
the receipt of dividends corresponding to at least 3% of the preferred
shares' book value; and (2) the right to participate equally in the
distribution of profits with the common shares after the common shares
have received dividends equal to at least 3% of the book value of the
common shares;
•
the right to receive dividends in an amount per share at least 10%
higher than the amount per share paid to holders of common shares; or
•
tag-along rights of at least 80% of the price paid to the
controlling shareholder in case of transfer of control and dividends at
least equal to the dividends paid to the holders of common shares.
The Company's bylaws provide that all of the Company's shares will be
entitled to tag-along rights in the event that the control of the Company is
transferred, with all shares receiving the same price per share paid to the
controlling shareholders.
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If the controlling shareholders enter into a transaction which results in
a change of control of the Company, the controlling shareholders must include
in the documents governing such transaction an obligation on the part of the
acquiring party to make a public offer for the purchase of all common shares
and preferred shares issued by the Company for the same price per share paid to
the controlling shareholders. The tender offer must be made within a period of
30 days prior to the formal transfer of the shares representing the controlling
stake and is effected through the financial institution responsible for the
custody of the Company's shares.
The Company's bylaws provide that no change of control will be deemed to
occur if the party acquiring control is an existing member of the block of
controlling shareholders, and/or a signatory to an agreement among the
Company's shareholders governing the exercise of rights over the shares held by
the controlling shareholders. The Company's bylaws also provide that the
tag-along right will not apply in the event that the change of control occurs
as a result of:
•
a court ruling or act, such as a judicial seizure or execution; or
•
a final decision by regulatory authorities, including CADE, that
obliges the controlling shareholders of the Company to divest part or
all of their shares in the Company.
Rights of Withdrawal
Brazilian law provides that, under certain limited circumstances, a
dissenting shareholder may withdraw its equity interest from the Company and be
reimbursed by the Company for the value of the common or preferred shares that
it holds.
This right of withdrawal may be exercised by the holders of the adversely
affected common or preferred shares if the Company decides:
•
to create a new class of preferred shares or to disproportionately
increase an existing class of preferred shares relative to the other
classes of preferred shares (unless such actions are provided for or
authorized by the bylaws, which permit the Company to modify the
proportion between the various classes of the Company's preferred
shares); or
•
to modify a preference, privilege or condition of redemption or
amortization conferred on one or more classes of preferred shares, or
to create a new class of preferred shares with greater privileges than
the existing classes of preferred shares.
•
to merge into another company or to consolidate with another company;
•
to transfer all of the Company's shares to another company, known as an
incorporação de ações
;
•
to participate in a centralized
group of companies as defined under the Brazilian Corporate Law;
•
to reduce the mandatory distribution;
•
to change the Company's corporate purposes;
•
to spin-off a portion of the Company's company, subject to certain
conditions set forth in the Brazilian Corporate Law; or
•
to create founder shares
(
partes beneficiárias
).
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As a general rule, shareholders who acquire their shares after the first
notice convening the relevant shareholders' meeting or after a press release
concerning the relevant shareholders' meeting is published will not be entitled
to withdrawal rights.
This right of withdrawal may also be exercised if the entity resulting
from a merger,
incorporação de ações
, or consolidation or spin-off of the
Company fails to become a listed company within 120 days of the shareholders'
meeting at which such decision was taken (one of the companies involved must be
a public company prior to the merger). Furthermore, if a governmental entity
acquires control of the Company through expropriation of shares, shareholders
may withdraw from the Company and be reimbursed for the value of the
shareholders' equity attributable to their equity interest.
Any redemption of shares arising out of the exercise of any withdrawal
rights would be made at book value per share, determined on the basis of their
most recent audited balance sheet approved by the shareholders. However, if
the shareholders' meeting approving the action giving rise to withdrawal rights
occurred more than 60 days after the date of the most recent approved audited
balance sheet, a shareholder may demand that his or her shares be valued
on the basis of a balance sheet dated within 60 days of such shareholders'
meeting. The right of withdrawal lapses 30 days after the date of publication
of the minutes of the shareholders' meeting that approved the corporate action
described above. The Company may reconsider any action giving rise to
withdrawal rights within 10 days following the expiration date for such rights
if it believes that the withdrawal of shares of dissenting shareholders would
jeopardize the Company's financial stability.
Liability of The Company's Shareholders for Further Capital Calls
Neither Brazilian law nor the Company's bylaws provide for any capital
calls. The Company's shareholders' liability for capital calls is limited to
the payment of the issue price of the shares subscribed or acquired.
Disclosures of Share Ownership
Brazilian regulations require that the controlling shareholders, directly
or indirectly, and the shareholders who have elected members of the Board of
Directors, as well as any person or group of persons representing a person that
has directly or indirectly acquired or sold an interest corresponding to at
least 5% of the total number of shares of any type or class, to disclose its
share ownership or divestment to the CVM and the BOVESPA and the Brazilian OTC
Market (or the over-the-counter markets), as the case may be. In addition, a
statement containing the required information must be published, unless the CVM
waives compliance with this rule. Any subsequent increase or decrease by 5% or
more in the ownership of shares of any type or class must be similarly
disclosed.
The Company's controlling shareholders, shareholders that appoint members
of the Board of Directors or Fiscal Council and members of the Board of
Directors, Board of Executive Officers or Fiscal Council must immediately file
a statement of any change in their holdings of the Company's shares with the
CVM and the Brazilian stock exchanges (or the over-the-counter markets) on
which the Company's securities are traded.
Restrictions on Non-Brazilian Holders
Non-Brazilian holders do not face any legal restrictions on the ownership
of the Company's common or preferred shares or of ADSs based on the Company's
common or preferred shares, and are entitled to all the rights and preferences
of such common or preferred shares, as the case may be.
However, the ability to convert dividend payments and proceeds from the
sale of common or preferred shares or preemptive rights into foreign currency
and to remit such amounts outside Brazil is subject to restrictions under
foreign investment legislation which generally requires, among other things,
the registration of the relevant equity investment with the Central Bank of
Brazil. For a description of these exchange control restrictions and foreign
investment legislation, see "Item 3. Key Information—Exchange Rates."
Nonetheless, any non-Brazilian holder who registers with the CVM in accordance
with Resolution No. 2,689 may buy and sell securities on the BOVESPA without
obtaining a separate certificate of registration from the Central Bank for each
transaction.
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Form and Transfer
The Company's preferred shares and common shares are in book-entry form
registered in the name of each shareholder or its nominee. The transfer of the
Company's shares is governed by Article 35 of the Brazilian Corporate Law,
which provides that a transfer of shares is effected by the Company's transfer
agent, Banco Itaú S.A., by an entry made by the transfer agent in its books,
upon presentation of valid share transfer instructions to the Company by a
transferor or its representative. When preferred or common shares are acquired
or sold on a Brazilian stock exchange, the transfer is effected on the records
of the Company's transfer agent by a representative of a brokerage firm or the
stock exchange's clearing system. The transfer agent also performs all the
services of safe keeping of the Company's shares. Transfers of shares by a
foreign investor are made in the same manner and are executed on the investor's
behalf by the investor's local agent. If the original investment was
registered with the Central Bank pursuant to foreign investment regulations,
the foreign investor is also required to amend, if necessary, through its local
agent, the certificate of registration to reflect the new ownership.
The BOVESPA operates a central clearing system through CBLC. A holder of
the Company's shares may choose, at its discretion, to participate in this
system, and all shares that such shareholder elects to be put into the system
are deposited in custody with CBLC (through a Brazilian institution that is
duly authorized to operate by the Central Bank and maintains a clearing account
with CBLC). Shares are subject to the custody of the CBLC are noted as such in
the Company's registry of shareholders. Each participating shareholder will,
in turn, be registered in the register of beneficial shareholders of the
Company that is maintained by CBLC and are treated in the same manner as
registered shareholders.
Material Contracts
Naphtha and Gas Oil Purchase and Sale Contract
On June 22, 1978, Petrobras and the Company entered into the Naphtha and
Gas Oil Purchase and Sale Contract. The Company's predecessor, Copene, filed
an English translation of this contract with the Commission on September 30,
1998 as Exhibit 3.04 to its Registration Statement on Form 20-F. On February
8, 1993, Petrobras and the Company entered into the First Amendment to Naphtha
and Gas Oil Purchase and Sale Contract (the "First Amendment"). The Company's
predecessor, Copene, filed an English translation of this amendment with the
Commission on September 30, 1998 as Exhibit 3.05 to its Registration Statement
on Form 20-F. On February 24, 2003, Petrobras and the Company, with the
acknowledgement of OPP Química, entered into the Second Amendment to Naphtha
and Gas Oil Purchase and Sale Contract (the "Second Amendment"). The Second
Amendment is attached as exhibit 4.03 to this annual report.
Under the Naphtha and Gas Oil Purchase and Sale Contract, as amended:
•
Petrobras agrees to sell and deliver to the Company naphtha and gas
oil for use by the Company as raw materials at its basic petrochemicals
plants in the Northeastern Complex;
•
the contract provides minimum and maximum volumes of naphtha and
gas oil to be supplied by Petrobras and purchased by the Company
through 1994;
•
after 1994, the Company may establish on September 30 of each year
the volume that it expects to consume in the following calendar year;
•
if the Company requests to purchase more volumes of naphtha and gas
oil than projected on an annual basis, Petrobras must use its best
efforts to meet this higher demand, but is not required to meet such
higher demand;
•
if the Company fails to purchase the minimum volumes that it agreed
to purchase in any given year, the Company will be required to pay
Petrobras damages, and if Petrobras fails to deliver to the Company the
minimum volumes that it agreed to deliver in any given year, Petrobras
will be required to pay the Company damages;
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•
Petrobras can suspend deliveries under the contract, in whole or in
part, or may terminate the contract without penalties if required by
the ANP as a result of a national contingency plan that affects the
supply of petroleum derivatives in Brazil; and
•
the term of the Amended Naphtha and Gas Oil Purchase and Sale
Contract is ten years and is automatically renewable.
Petrobras has provided a R$570 million credit line to the Company to
purchase naphtha and gas oil, which is guaranteed by first mortgages
(formalized under a Public Deed of Mortgage) on two parcels of property owned
by the Company (which property belonged to OPP Química prior to its merger with
and into the Company on March 31, 2003).
The Company has not entered into any other material contracts other than
those entered into in the ordinary course of business or those disclosed
elsewhere within this Form 20-F.
Exchange Controls
There are no restrictions on ownership or voting of Braskem's capital
stock by individuals or legal entities domiciled outside Brazil.
The right to convert dividend payments and proceeds from the sale of the
Company's capital stock into foreign currency and to remit such amounts outside
Brazil is subject to restrictions under foreign investment legislation which
generally requires, among other provisions, registration of the relevant
investment with the Central Bank. Restrictions on the remittance of foreign
capital abroad could hinder or prevent Banco Itaú S.A. (the "Custodian"), as
custodian for the Preferred Shares represented by Preferred ADSs or holders who
have exchanged Preferred ADSs for Preferred Shares, from converting dividends,
distributions or the proceeds from any sale of Preferred Shares into U.S.
dollars and remitting such U.S. dollars abroad. Holders of Preferred ADSs
could be adversely affected by delays in, or refusal to grant any required
government approval for conversions of Brazilian currency payments and
remittances abroad in respect of the Preferred Shares underlying the Preferred
ADSs. See "– Risk Factors – Exchange Controls and Restrictions on Remittances
Abroad May Adversely Affect Holders of ADSs."
Resolution No. 1,927 of the National Monetary Council, which is the
Amended and Restated Annex V to Resolution No. 1,289 (the "Annex V
Regulations"), provides for the issuance of depositary receipts in foreign
markets in respect of shares of Brazilian issuers. The Central Bank and the CVM
have approved the issuance of the ADSs under the Annex V Regulations.
Accordingly, the proceeds from the sale of the ADSs by ADR holders outside
Brazil are not subject to Brazilian foreign investment controls, and holders of
the ADSs are entitled to favorable tax treatment. See "– Taxation – Brazilian
Tax Considerations."
A certificate of capital registration has been issued in the name of
Citibank, N.A., as Depositary for the Preferred Class A ADRs (the
"Depositary"), and is maintained by the Custodian on behalf
of the Depositary. Pursuant to the certificate, the Custodian and the
Depositary may convert dividends and other distributions with respect to the
Preferred Class A Shares represented by Preferred Class A ADRs into foreign
currency and remit the proceeds in foreign currency outside Brazil. In the
event that a holder of Preferred Class A ADRs exchanges Preferred Class A ADRs
for Preferred Class A Shares, such holder may continue to rely on the
Depositary's certificate of capital registration for only five business days
following such exchange, and thereafter such holder must seek to obtain its
own certificate of capital registration with the Central Bank. Thereafter,
unless the Preferred Class A Shares are held pursuant to the "Annex IV
Regulations" of the National Monetary Council by a duly qualified investor,
such holder may not be able to convert into foreign currency and remit outside
Brazil the proceeds from the disposition of, or distributions with respect to,
such Preferred Class A Shares, and such holder generally will be subject to
less favorable Brazilian tax treatment than a holder of Preferred Class A ADRs.
See "– Taxation – Brazilian Tax Considerations."
The Company makes all cash distributions with respect to its shares,
including the Preferred Class A Shares, solely in Brazilian currency.
Accordingly, exchange rate fluctuations may reduce the U.S. dollar amounts
received by the holders of Preferred Class A ADSs on conversion by the
Depositary of such distributions into U.S. dollars for payment to holders of
Preferred Class A ADSs. Fluctuations in the exchange rate between
reais
and the
U.S. dollar may also reduce the U.S. dollar equivalent of the
reais
price of
the Preferred Class A Shares on the Brazilian stock exchanges. See "Item 3.
Key Information—Exchange Rates
."
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Brazilian law provides that, whenever there is a serious imbalance in
Brazil's balance of payments or serious reasons to foresee such imbalance,
temporary restrictions may be imposed on remittances of foreign capital abroad.
For approximately six months in 1989 and early 1990, for example, to attempt to
conserve Brazil's foreign currency reserves, the Brazilian government froze all
dividend and capital repatriations that were owed to foreign equity investors.
These amounts were subsequently released in accordance with Brazilian
Government directives. There can be no assurance that similar measures will not
be taken by the Brazilian Government in the future. See "– Risk Factors –
Exchange Controls and Restrictions on Remittances Abroad May Adversely Affect
Holders of ADSs."
For a
description of the foreign exchange markets in Brazil, see "Item
3. Key
Information – Selected Financial Data – Exchange Rates."
Taxation
The following summary contains a description of the principal Brazilian
and U.S. federal income tax consequences of the purchase, ownership and
disposition of Preferred Class A Shares and Preferred Class A ADRs, but it does
not purport to be a comprehensive description of all of the tax considerations
that may be relevant to a decision to purchase any such securities. In
particular, for U.S. federal income tax purposes, this summary is applicable
only to holders that hold Preferred Class A Shares or Preferred Class A ADRs as
"capital assets" within the meaning of Section 1221 of the Internal Revenue
Code of 1986, as amended (the "Code"), and does not address the tax treatment
of a holder that may be subject to special tax rules, such as financial
institutions, insurance companies, real estate investment trusts, regulated
investment companies, grantor trusts, tax-exempt entities, traders or dealers
in securities or currencies, persons that will hold Preferred Class A Shares or
Preferred Class A ADRs in a hedging transaction or as a position in a
"straddle" or "conversion transaction" for U.S. federal income tax purposes,
persons that have a "functional currency" other than the U.S. dollar, persons
that will hold Preferred Class A Shares or Preferred Class A ADRs as
compensation for the performance of services, persons liable for alternative
minimum tax or estate and gift tax or persons that own or are treated as owning
10% or more of the voting shares or value of the Company. Prospective
purchasers of any of such securities should consult their own tax advisors as
to the Brazilian, U.S. or other tax consequences of the purchase, ownership and
disposition of Preferred Class A Shares or Preferred Class A ADRs, including,
in particular, the effect of any foreign, state or local tax laws.
The summary is based upon the tax laws of Brazil and the United States and
regulations thereunder and administrative and judicial interpretations thereof,
in each case as in effect and available on the date hereof, which are subject
to change (possibly with retroactive effect), and to differing interpretations.
There is at present no income tax treaty between Brazil and the United States.
This summary is also based upon the representations of the Depositary and on
the assumption that each obligation in the Deposit Agreement relating to the
Preferred Class A ADRs and any related documents will be performed in
accordance with its terms.
Brazilian Tax Considerations
The following discussion summarizes the principal Brazilian tax
consequences of the acquisition, ownership and disposition of Preferred Class A
Shares or Preferred Class A ADRs by a holder that is not domiciled in Brazil
for purposes of Brazilian taxation and, in the case of a holder of Preferred
Shares, which has registered its investment in such securities with the Central
Bank as a U.S. dollar investment (in each case, a "non-Brazilian holder"). The
following discussion does not specifically address all of the Brazilian tax
considerations applicable to any particular non-Brazilian holder, and each
non-Brazilian holder should consult his or her own tax advisor concerning the
Brazilian tax consequences of an investment in any of such securities.
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Taxation of dividends
Dividends paid with respect to income earned since January 1, 1996,
including dividends paid in kind (1) to the Depositary in respect of the
Preferred Class A Shares underlying the Preferred Class A ADRs or (2) to a
non-Brazilian holder in respect of Preferred Class A Shares, are not subject to
any withholding tax in Brazil. The new tax legislation eliminated the then
existing 15% withholding tax on dividends paid to companies, resident
individuals or non-residents in Brazil. Accordingly, dividends with respect to
profits generated on or after January 1, 1996 are not subject to withholding
tax in Brazil. Dividends related to profits generated in the years of 1994 and
1995 shall be subject to withholding tax at the rate of 15% at the time of its
distribution.
Taxation of gains
Gains realized outside Brazil by a non-Brazilian holder on the disposition
of Preferred Class A ADRs to another non-Brazilian holder are not subject to
Brazilian tax.
The withdrawal of Preferred Class A Shares in exchange for Preferred Class
A ADRs is not subject to Brazilian tax. The deposit of Preferred Class A
Shares in exchange for Preferred Class A ADRs is not subject to Brazilian tax
provided that the Preferred Shares are registered by the investor or its agent
under the provisions of Resolution No.
2,689/00 of the National Monetary Council. In the event the Preferred
Class A Shares are not so registered, the deposit of Preferred Class A Shares
in exchange for Preferred Class A ADRs may be subject to Brazilian capital
gains tax at the rate of 15%. On receipt of the underlying Preferred Shares, a
non-Brazilian holder who qualifies under Resoluton No. 2689/00 will be entitled
to register the U.S. dollar value of such shares with the Central Bank as
described below.
Non-Brazilian holders are not subject to tax in Brazil on gains realized
on sales of Preferred Class A Shares that occur abroad or on the proceeds of a
redemption of, or a liquidating distribution with respect to, Preferred Class A
Shares. As a general rule: (1) non-Brazilian holders are subject to a
withholding tax imposed at the rate of 15% on gains realized on sales or
exchanges of Preferred Class A Shares that occur in Brazil to or with a
resident of Brazil; and (2) at the rate of 20% on gains realized on sales or
exchanges in Brazil of Preferred Class A Shares that occur on a Brazilian stock
exchange. This general rule is not applicable if such sales are made on a
Brazilian stock exchange within five business days of the withdrawal of such
Preferred Class A Shares in exchange for Preferred Class A ADRs and the
proceeds thereof are remitted abroad within such five-day period or such sales
are made under the provisoins of Resoultion No. 2,689/00. In the event that
the sale or exchange of Preferred Class A Shares is made on a Brazilian stock
exchange and in accordance with the provisions of Resolution 2,689/00 or of
Annex V to Resolution No. 1,289/87, any capital gain resulting from such sale
or exchange is exempt from withholding income tax in Brazil (except where the
sale or exchange was structured to occur when the capital gain resulting
therefrom reached an amount certain). The "gain realized" as a result of a
transaction on a Brazilian stock exchange is the difference between the amount
in Brazilian currency realized on the sale or exchange and the acquisition
cost, without any correction for inflation, of the shares sold. The "gain
realized" as a result of a transaction that occurs other than on a Brazilian
stock exchange will be calculated based on the foreign currency amount
registered with the Central Bank. There can be no assurance that the current
preferential treatment for holders of Preferred Class A ADSs and non-Brazilian
holders of Preferred Class A Shares under the provisions of Resolution No.
2,689/00 will continue in the future or that such treatment will not be changed
in the future.
Any exercise of preemptive rights relating to the Preferred Class A Shares
will not be subject to Brazilian taxation. Any gain on the sale or assignment
of preemptive rights relating to the Preferred Class A Shares by the Depositary
will not be subject to Brazilian taxation.
Interest on equity
Distributions of interest on net worth in respect of the Preferred Class A
Shares as an alternative form of payment to shareholders who are either
Brazilian residents or non-Brazilian residents, including holders of ADRs, are
subject to Brazilian withholding tax at the rate of 15%. Since 1997, the
payments are deductible in determining social welfare contributions and income
tax payable by the Company as long as the payment of a distribution of
interest
is approved in the Company's General Meeting, according to the terms of Law
9249/95 and Law 9430/96. The distribution of interest on shareholders' equity
may be determined by the Board of Directors of the Company alone. No assurance
can be given that the Board of Directors of the Company will not determine that
future distributions of profits be made by means of interest on shareholders'
equity instead of by means of dividends.
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Other Brazilian taxes
There are no Brazilian inheritance, gift or succession taxes applicable to
the ownership, transfer or disposition of Preferred Class A Shares or Preferred
Class A ADRs by a non-Brazilian holder except for gift and inheritance taxes
which are levied by some states of Brazil on gifts made or inheritances
bestowed by individuals or entities not resident or domiciled in Brazil or
domiciled within the state to individuals or entities resident or domiciled
within such state in Brazil. There are no Brazilian stamp, issue, registration
or similar taxes or duties payable by holders of Preferred Class A Shares or
Preferred Class A ADRs.
Pursuant to Decree 2,219 of May 2, 1997, the amount in
reais
resulting
from the conversion of the proceeds received by a Brazilian entity from a
foreign investment in the Brazilian securities market (including those in
connection with the investment in the Preferred Class A Shares or Preferred
Class A ADRs and those made under the provisions of Resolution No. 2,689/000)
is subject to a transaction tax ("IOF"), although at present the rate of such
tax is 0%. The Minister of Finance is empowered to establish the
applicable IOF tax rate. Under Law 8,894 of June 21, 1994, such IOF tax rate
may be increased at any time to a maximum of 25%, but any such increase will
only be applicable to transactions occurring after such increase becomes
effective.
Pursuant to the Brazilian Constitution (E.C. No. 21/99), the
Contribuição
Provisória sobre Movimentação Financeira
(the "CPMF tax") was levied at a rate
of 0.38%, in the first twelve months after June 17, 1999, 0.30% from June 2000
until March 17, 2001, and back to 0.38% after that through the present on all
fund transfers in connection with financial transactions in Brazil. Payments of
dividends on the Preferred Class A Shares (and the Preferred Class A ADSs) are
subject to the CPMF tax. However, only the Company is liable for the CPMF tax
on its dividends, which are payable without reduction for this tax. There can
be no assurance that the Brazilian government will not extend the payment of
the CPMF tax beyond that time, or will convert it into a new permanent tax.
Resident in tax haven
The general rules establish that any income or earnings received by a
beneficiary resident in a tax haven is subject to income tax at the rate of
25%. A tax haven is a location where no income tax is imposed or where its
maximum applicable rate is lower than 20%. Tax benefits granted through the
provisions of Resolution No. 2,689/00 are not applicable to residents in a
so-called tax haven country. In this case, such investors shall be taxed
according to the same rules that are applicable to Brazilian residents.
Dividends and capital gains are not affected by tax haven rules. However, the
preferential tax treatment applicable to capital gains arising out of sales or
exchanges of equity securities that settle through an official stock market and
are otherwise effected in accordance with the provisions of Resolution No.
2,689/00 is not applicable if the investor is domiciled or resides in a tax
haven.
Registered capital
The amount of an investment in Preferred Class A Shares held by a
non-Brazilian holder who qualifies and registers with the CVM under the
provisions of Resolution No. 2,689/00 or in ADSs held by the Depositary
representing such holder, as the case may be, is eligible for registration with
the Central Bank; such registration (the amount so registered is referred to as
"Registered Capital") allows the remittance outside Brazil of foreign currency,
converted at the Commercial Market Rate, acquired with the proceeds of
distributions on, and amounts realized with respect to disposition of, such
Preferred Class A Shares. The Registered Capital for Preferred Class A Shares
purchased in the form of a Preferred Class A ADRs, or purchased in Brazil and
deposited with the Depositary in exchange for a Preferred Class A ADS, will be
equal to their purchase price (in U.S. dollars) paid by the purchaser. The
Registered Capital for Preferred Class A Shares that are withdrawn upon
surrender of Preferred Class A ADSs, will be the U.S. dollar equivalent of (1)
the average price of the Preferred Class A Shares on the Brazilian stock
exchange on which the greatest number of such Preferred Class A Shares was sold
on the day of withdrawal, or (2) if no Preferred Class A Shares were sold on
such day, the average price of Preferred Shares that were sold in the fifteen
trading sessions immediately preceding such withdrawal. The U.S. dollar value
of the Preferred Class A Shares is determined on the basis of the average
Commercial Market rates quoted by the Central Bank on such date (or, if the
average price of Preferred Class A Shares is determined under clause (2) of the
preceding sentence, the average of such average quoted rates on the same
fifteen dates used to determine the average price of the Preferred Class A
Shares).
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A non-Brazilian holder of Preferred Class A Shares may experience delays
in effecting the registration of Registered Capital which may delay remittances
abroad. Such a delay may adversely affect the amount, in U.S. dollars,
received by the non-Brazilian holder.
U.S. Federal Income Tax Considerations
As used below, a "U.S. holder" is a beneficial owner of a Preferred Class
A Share or Preferred Class A ADS that is, for U.S. federal income tax purposes,
(1) an individual citizen or resident of the United States, (2) a partnership
or corporation organized under the laws of the United States, any State thereof
or the District of Columbia, (3) an estate the income of which is subject to
U.S. federal income taxation regardless of its source, (4) a
trust if such trust validly elects to be treated as a United States person
for U.S. federal income tax purposes or if (a) a court within the United States
is able to exercise primary supervision over its administration and (b) one or
more United States persons have the authority to control all of the substantial
decisions of such trust or (5) any other person or entity that is subject to
U.S. federal income tax on a net income basis in respect of the Preferred Class
A Shares or Preferred Class A ADSs (including a nonresident alien individual or
foreign corporation whose income with respect to a Preferred Class A Share or
Preferred Class A ADS is effectively connected with the conduct of a U.S. trade
or business). As used below, a "Non-U.S. holder" is a beneficial owner of a
Preferred Class A or Preferred Class A ADS that is not a U.S. holder.
If a partnership (or any other entity treated as a partnership for U.S.
federal income tax purposes) holds Preferred Class A Shares or Preferred Class
A ADSs, the tax treatment of a partner in such partnership will generally
depend on the status of the partner and the activities of the partnership.
Such a partner should consult its tax advisor as to its tax consequences.
In general, for U.S. federal income tax purposes, a holder of an ADR
evidencing an ADS will be treated as the beneficial owner of the Preferred
Class A Shares represented by the applicable ADS. The U.S. Treasury Department
has expressed concern that depositaries for ADRs, or other intermediaries
between the holders of shares of an issuer and the issuer, may be taking
actions that are inconsistent with the claiming of U.S. foreign tax credits by
U.S. holders of such receipts or shares. Accordingly, the analysis regarding
the availability of a United States foreign tax credit for Brazilian taxes and
sourcing rules described below could be affected by future actions that may be
taken by the U.S. Treasury Department.
Taxation of dividends
Subject to the discussion below under "Passive Foreign Investment Company
Rules," in general, a distribution made with respect to a Preferred Class A
Share or Preferred Class A ADS (which for this purpose will include
distributions of interest on equity) will, to the extent made from the current
or accumulated earnings and profits of the Company, as determined under U.S.
federal income tax principles, constitute a dividend to a U.S. holder for U.S.
federal income tax purposes. Subject to the discussion below under "Passive
Foreign Investment Company Rules," with respect to dividends received in
taxable years after December 31, 2002 with respect to Preferred Class A Shares
that are represented by Preferred Class A ADSs, individuals who are U.S.
holders will be taxed on such distributions at the lower rates applicable to
long-term capital gains. Subject to the discussion below under "Passive
Foreign Investment Rules," if a distribution exceeds the amount of the
Company's current and accumulated earnings and profits, it will be treated as a
non-taxable return of capital to the extent of the U.S. holder's tax basis in
the Preferred Class A Share or Preferred Class A ADS on which it is paid and
thereafter as capital gain. The Company does not
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maintain calculations of its
earnings and profits under U.S. federal income tax principles. As discussed
below, the term "dividend" means a distribution that constitutes a dividend for
U.S. federal income tax purposes.
The gross amount of any dividend paid (which will include any amounts
withheld in respect of Brazilian taxes) with respect to a Preferred Class A
Share or Preferred Class A ADS will be subject to U.S. federal income taxation
as foreign source dividend income, which may be relevant in calculating a U.S.
holder's foreign tax credit limitation, and will not be eligible for the
dividends received deduction generally allowed to U.S. corporations. A
dividend paid in Brazilian currency will be includible in the income of a U.S.
holder at its value in U.S. dollars calculated by reference to the prevailing
spot market exchange rate in effect on the day it is received by the U.S.
holder or, in the case of a dividend received in respect of Preferred Class A
ADSs, on the date the dividend is received by the Depositary, whether or not
the dividend is converted into U.S. dollars. Any gain or loss realized on a
subsequent conversion or other disposition of the Brazilian currency will be
treated as U.S. source ordinary income or loss. In the case of a U.S. holder
that is not a United States person, the currency gain or loss will be U.S.
source income only if the currency is held by a qualified business unit of the
U.S. holder in the United States.
Subject to generally applicable limitations under U.S. federal income tax
law, the Brazilian withholding tax will be treated as a foreign income tax
eligible for credit against a U.S. holder's U.S. federal income tax liability.
For purposes of the computation of the foreign tax credit limitation separately
for specific categories of income, any dividends generally will constitute
foreign source "passive income" or, in the case of certain holders, "financial
services income." Alternatively, a U.S. holder may elect not to claim a
credit for any of its foreign taxes and deduct all of those taxes in computing
taxable income.
Subject to the discussion below under "Information Reporting and Backup
Withholding," a Non-U.S. Holder of Preferred Class A Shares or Preferred Class
A ADSs generally will not be subject to U.S. federal income or withholding tax
on dividends received on such shares or ADSs, unless such income is effectively
connected with the conduct by such Non-U.S. Holder of a trade or business in
the United States.
Sale or exchange of shares or ADSs
A deposit or withdrawal of Preferred Class A Shares by a holder in
exchange for a Preferred Class A ADS that represents such shares will not result
in the realization of gain or loss for U.S. federal income tax purposes. A U.S.
holder generally will recognize capital gain or loss upon a sale or other
exchange of a Preferred Class A Share or Preferred Class A ADS held by the U.S.
holder or the Depositary in an amount equal to the difference between the U.S.
holder's adjusted basis in the Preferred Class A Share or Preferred Class A ADS
(determined in U.S. dollars) and the U.S. dollar amount realized on the sale or
other exchange. If a Brazilian tax is withheld on the sale or exchange of a
share, the amount realized by a U.S. holder will include the gross amount of
the proceeds of that sale or exchange before deduction of the Brazilian tax.
In the case of a non-corporate U.S. holder, the maximum marginal U.S. federal
income tax rate applicable to capital gain will be lower than the maximum
marginal U.S. federal income tax rate applicable to ordinary income (other
than, in the case of taxable years beginning after December 31, 2002, certain
dividends) if such holder's holding period for such Preferred Class A Share or
Preferred Class A ADS exceeds one year. Capital gain or loss, if any, realized
by a U.S. holder on the sale or exchange of a Preferred Class A Share or
Preferred Class A ADS generally will be treated as U.S. source income for U.S.
foreign tax credit purposes. Consequently, in the case of a disposition of a
Preferred Class A Share that is subject to Brazilian tax imposed on the gain
(or, in the case of a deposit, in exchange for a Preferred Class A ADS or a
Preferred Class A Share that is not registered under the Annex IV regulations,
on which a Brazilian capital gains tax is imposed) (See "– Brazilian Tax
Considerations – Taxation of Gains"), the U.S. holder may not be able to use
the foreign tax credit for that Brazilian tax unless it can apply the credit
against U.S. tax payable on other income from foreign sources in the
appropriate income category, or alternatively, it may take a deduction for the
Brazilian tax if it elects to deduct all of its foreign income taxes. In
general, any loss will be sourced to the taxpayer's residence (as specially
defined in Section 865(g) of the Code), subject to certain exceptions that can
treat a loss recognized by a U.S. resident in whole or in part as a foreign
source loss. The deductibility of capital losses is subject to limitations.
The initial tax basis of Preferred Class A Shares
or Preferred Class A ADSs to
a U.S. holder will be the U.S. dollar value of the
real
denominated purchase
price determined on the date of purchase. If the Preferred Class A Shares or
Preferred Class A ADSs are treated as traded on an "established securities
market," a cash basis U.S. holder, or, if it elects, an accrual basis U.S.
holder, will determine the dollar value of the cost of such Preferred Class A
Shares or
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Preferred Class A ADSs by translating the amount paid at the spot
rate of exchange on the settlement date of the purchase. The conversion of
U.S. dollars to
reais
and the immediate use of that currency to purchase
Preferred Class A Shares or Preferred Class A ADSs generally will not result in
taxable gain or loss for a U.S. holder.
With respect to the sale or exchange of Preferred Class A Shares or
Preferred Class A ADSs, the amount realized generally will be the U.S. dollar
value of the payment received determined on (1) the date of receipt of payment
in the case of a cash basis U.S. holder and (2) the date of disposition in the
case of an accrual basis U.S. holder. If the Preferred Class A Shares or
Preferred Class A ADSs are treated as traded on an "established securities
market," a cash basis taxpayer, or, if it elects, an accrual basis taxpayer,
will determine the U.S. dollar value of the amount realized by translating the
amount received at the spot rate of exchange on the settlement date of the
sale.
Subject to the discussion below under "Information Reporting and Backup
Withholding," a Non-U.S. holder of Preferred Class A Shares or Preferred Class
A ADSs generally will not be subject to U.S. federal income or withholding tax
on any gain realized on the sale or exchange of such shares or ADSs unless (1)
such gain is effectively connected with the conduct by such Non-U.S. holder of
a trade or business in the United States or (2) in the case of any gain
realized by an individual Non-U.S. holder, such holder is present in the United
States for 183 days or more in the taxable year of such sale or exchange and
certain other conditions are met.
Passive foreign investment company rules
Based upon the nature of its current and projected income, assets and
activities, the Company does not expect the Preferred Class A Shares or
Preferred Class A ADSs to be considered shares of a passive foreign investment
company ("PFIC") for U.S. federal income tax purposes for the 2002 taxable
year. In general, a foreign corporation is a PFIC if, after applying certain
look-through rules, at least 75% of its gross income for the taxable year (or,
in general, a preceding taxable year in which the taxpayer owned stock in the
corporation) is passive income or if at least 50% of the average value of its
gross assets for the taxable year (or, in general, a preceding year in which
the taxpayer owned stock in the corporation) produce passive income or are held
for the production of passive income. In general, passive income for this
purpose includes dividends, interest, rents, royalties, and gains from
commodities and securities transactions. The determination of whether the
Preferred Class A Shares or Preferred Class A ADSs constitute shares of a PFIC
is a factual determination made annually, and therefore the Company's failure
to constitute a PFIC at one time is subject to change. The Company's status in
future years will depend on its assets and activities in those years. The
Company has no reason to believe that its assets or activities will change in a
manner that would cause it to be classified as a PFIC, but there can be no
assurance that the Company will not be considered a PFIC for any taxable year.
Subject to certain exceptions, once a U.S. holder's Preferred Class A Shares or
Preferred Class A ADSs are treated as shares of a PFIC, they remain shares in a
PFIC.
If the Company is treated as a PFIC, contrary to the discussion in
"Taxation of Dividends" and "Sale or Exchange of Shares or ADSs" above, a U.S.
holder of Preferred Class A Shares or Preferred Class A ADSs generally would be
subject to imputed interest charges and other disadvantageous tax treatment
(including, with respect to dividends received in taxable years after December
31, 2002 with respect to Preferred Class A Shares that are represented by
Preferred Class A ADSs, the denial of the taxation of such dividends at the
lower rates applicable to long-term capital gains, as discussed above under
"Taxation of Dividends") with respect to any gain from the sale or exchange of,
and certain distributions with respect to, the Preferred Class A Shares or
Preferred Class A ADSs.
If the Company is treated as a PFIC, a U.S. holder of Preferred Class A
Shares or Preferred Class A ADSs could make a variety of elections that may
alleviate the tax consequences referred to above, and one of these elections
may be made retroactively. However, it is expected that the conditions
necessary for making certain of such elections will not apply in the case of
the Preferred Class A Shares or Preferred Class A ADSs. U.S. holders should
consult their own tax advisors regarding the tax consequences that would arise
if the Company is treated as a PFIC.
Information reporting and backup withholding
United States backup withholding tax and information reporting
requirements generally apply to certain payments to certain noncorporate
holders of stock. Information reporting generally will apply to payments of
dividends on, and to proceeds from the sale or redemption of, Preferred Class A
Shares or Preferred Class A ADSs
made within the United States to a holder of
Preferred Class A Shares or Preferred Class A ADSs, other than an exempt
recipient, including a corporation, a payee that is not a United States person
that provides an appropriate certification and certain other persons. A payor
will be required to withhold backup withholding tax from any payments of
dividends on, or the proceeds from the sale or redemption of, Preferred Class A
Shares or Preferred Class A ADSs within the United States to a holder, other
than an exempt recipient, if such holder fails to furnish its correct taxpayer
identification number or otherwise fails to comply with, or establish an
exemption from, such backup withholding tax requirements. The backup
withholding tax rate was 30% for the year 2002 and is 28% for years 2003
through 2010.
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In the case of such payments made within the United States to a foreign
simple trust, a foreign grantor trust or a foreign partnership, other than
payments to a foreign simple trust, a foreign grantor trust or a foreign
partnership that qualifies as a "withholding foreign trust" or a "withholding
foreign partnership" within the meaning of certain U.S. Treasury Regulations
and payments to a foreign simple trust, a foreign grantor trust or a foreign
partnership that are effectively connected with the conduct of a trade or
business in the United States, the beneficiaries of the foreign simple trust,
the persons treated as the owners of the foreign grantor trust or the partners
of the foreign partnership, as the case may be, will be required to provide the
certification discussed above in order to establish an exemption from backup
withholding tax and information reporting requirements. Moreover, a payor may
rely on a certification
provided by a payee that is not a United States person only if such payor
does not have actual knowledge or a reason to know that any information or
certification stated in such certificate is incorrect.
The above description is not intended to constitute a complete analysis of all
tax consequences relating to acquisition, ownership and disposition of
Preferred Class A Shares or Preferred Class A ADSs. Prospective purchasers
should consult their tax advisors concerning the tax consequences of their
particular situations.
Documents on Display
Statements contained in this annual report regarding the contents of any
contract or other document are not necessarily complete, and where the contract
or other document is an exhibit to this annual report, each of these statements
is qualified in all respects by the provisions of the actual contract or other
documents.
The Company is subject to the information requirements of the Exchange
Act, applicable to a foreign private issuer, and accordingly, the Company files
or furnishes reports, information statements and other information with the
Commission. These reports and other information may be inspected and copied at
the public reference room maintained by the Commission at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549. Copies of this material also may be
obtained by mail from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference room.
Electronic filings made through the Electronic Data Gathering, Analysis and
Retrieval System (EDGAR) are also publicly available through the Commission's
web site on the Internet at http:\\www.sec.gov. These reports and other
information also may be inspected and copied at the offices of The New York
Stock Exchange, 20 Broad Street, New York, New York 10005.
As a foreign private issuer, the Company is exempt from the proxy
requirements of Section 14 of the Exchange Act and from the reporting and
"short swing" profit recovery provisions of Section 16 of the Exchange Act,
although the rules of the New York Stock Exchange may require the Company to
solicit proxies from its shareholders under some circumstances.
The Company also files financial statements and other periodic reports
with the CVM.
Copies of the Company's annual reports on Form 20-F and documents referred
to in this annual report and the Company's bylaws are also available for
inspection upon request at the Company's headquarters at: Av. Nações Unidas,
4777, São Paulo, SP - CEP 05477-000 Brazil.
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ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Braskem is exposed to a number of market risks arising from its normal
business activities. Such market risks principally involve the possibility
that changes in commodity prices, currency exchange rates or interest rates
will adversely affect the value of its financial assets and liabilities or
future cash flows and earnings. Market risk is the potential loss arising from
adverse changes in market rate and prices. Braskem enters into derivatives and
other financial instruments for purposes other than trading, in order to manage
and reduce the impact of fluctuations in foreign currency exchange rates and
interest rates. Braskem has established policies and procedures for risk
assessment and the approval, reporting and monitoring of derivative financial
activities.
Braskem developed a risk management policy as from December 31, 2001 with
the following objectives: maintain coverage of principal and interest
settlements (consolidated) maturing within 12 months for, at least (i) 60% of
Braskem's total U.S.-dollar indebtedness that is related to exports (trade
finance), excluding Advances on Currency Contracts (ACCs) with a remaining
maturity of up to 6 months and Advances on Export Contracts (ACEs) and (ii) 75%
of the total debt in U.S. dollars unrelated to exports (non-trade finance).
Compliance with this policy varies based upon applicable market conditions,
credit availability and cash balances.
To further mitigate its exposure to exchange rate risk, the Company tries,
when possible, to borrow for its working capital needs using trade finance
loans, which funding is generally available at a lower cost because it is
linked to the Company's U.S. dollar exports. The Company cannot assure,
however, that, in the future, U.S. dollar revenues that it generates from
exports will be in an amount sufficient to cover its U.S. dollar trade finance
liabilities.
On December 31, 2002, the Company had swap contracts for foreign currency
and interest, with a total notional amount of approximately U.S.$155.8 million.
These instruments are intended to reduce the impacts of an eventual
devaluation of the
real
and an increase in international interest rates on U.S.
dollar liabilities. In addition, Braskem has U.S. dollar denominated cash
equivalents and time deposits, which partially offset the effects of
devaluation related to the U.S. dollar debt to the extent of the dollar
denominated cash and cash equivalents.
The Company's derivative instruments do not qualify for deferral, hedge,
accrual or settlement accounting and are marked-to-market value, with the
resulting gains and losses reflected in the statement of operations within
financial income and expenses, respectively. See Note 16 to the Consolidated
Financial Statements for a discussion of the Company's accounting policies and
information on derivative financial instruments.
Interest Rate Risk
The Company's variable interest rate exposure is primarily subject to the
variations of (1) LIBOR for U.S. dollar-denominated borrowings and (2)
long-term interest rates (the "TJLP," which includes an inflation factor and is
determined quarterly by the Central Bank), short-term variable domestic
interbank interest rates ("CDI") and the IGP-M for
reais
-denominated
borrowings. The improvement of economic conditions in Brazil during 2002 due
to political uncertainty surrounding Brazil's presidential
elections resulted in
a gradual increase of the interest rates in the fourth quarter, with (1) the
short-term domestic CDI rate ranging from 19.05% per annum in January 2002 to
24.09% per annum in December 2002 (average of 19.1% per annum), (2) the TJLP at
10% per annum in January 2002 before decreasing in April through June 2002 and
then returning to 10% per annum through December 2002 (averaging 9.88% per
annum in 2002) and (3) the IGP-M at approximately 25.3% in 2002.
The table below provides information
about the Company's significant interest-rate sensitive
instruments:
Interest Rate Sensitivity – Principal (Notional) Amount by Expected Maturity –
Average Interest Rate
(in millions of U.S. dollars)
As of December 31, 2002
Expected Maturity Date
Fair
2003
2004
2005
2006
2007
Thereafter
Total
Value
LIABILITIES:
Short-term debt
Fixed rate, denominated in U.S. dollars
96.8
—
—
—
—
—
96.8
96.8
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Interest Rate Sensitivity – Principal (Notional) Amount by Expected Maturity –
Average Interest Rate
(in millions of U.S. dollars)
As of December 31, 2002
Expected Maturity Date
Fair
2003
2004
2005
2006
2007
Thereafter
Total
Value
Average interest rate
9
%
—
—
—
—
—
9
%
—
Fixed rate, denominated in Brazilian
reais
29.2
—
—
—
—
—
29.2
29.2
Average interest rate
27.5
%
—
—
—
—
—
27.5
%
—
Variable rate, denominated in Brazilian
reais
169.9
—
—
—
—
—
169.9
169.9
Average interest rate (of CDI)
106.8
%
—
—
—
—
—
106.8
%
—
Variable rate, denominated in Brazilian
reais
7.2
—
—
—
—
—
7.2
7.2
Average interest rate (over TJLP)
4.9
%
—
—
—
—
—
4.9
%
—
Total Short-term debt
303.0
—
—
—
—
—
303.0
303.0
Long-term debt, including
current portion:
Fixed rate, denominated in U.S. dollars
220.6
150.5
5.2
5.2
400.4
0.3
782.2
782.2
Average interest rate
6.8
%
11.4
%
0.5
%
0.5
%
10
%
6.9
%
9.3
%
—
Variable rate, denominated in U.S. dollars
150.0
176.8
137.0
68.1
3.7
—
535.6
535.6
Average interest rate (over LIBOR 6M)
5.9
%
5.9
%
6.1
%
6.5
%
4.9
%
—
6
%
—
Variable rate, denominated in Brazilian
reais
22.3
16.5
11.3
57.7
0.9
—
108.7
108.7
Average interest rate (over TJLP)
3.9
%
3.9
%
3.8
%
3.9
%
3.5
%
—
3.9
%
—
Variable rate, denominated in Brazilian
reais
15.4
15.1
4.4
—
—
—
34.9
34.9
Average interest rate (over IGP-M)
5.3
%
4.5
%
4.5
%
—
—
—
4.8
%
—
Other variable rate, denominated in
Brazilian
reais
4.7
4.6
0.6
0.3
0.2
—
10.4
10.4
Total Long-term debt, including current
portion (excluding debentures)
413.0
363.5
158.5
131.3
405.2
0.3
1,471.8
1,471.8
Debentures, including current portion
Variable rate, denominated in Brazilian
reais
2.5
60.9
—
—
—
—
63.4
63.4
Average interest rate (over IGP-M)
5.3
%
13.3
%
—
—
—
—
12.9
%
—
Variable rate, denominated in Brazilian
reais
6.6
93.8
—
—
—
—
100.4
100.4
Average interest rate (of CDI)
118.3
%
118.3
%
—
—
—
—
118.3
%
—
Variable rate, denominated in Brazilian
reais
—
—
—
—
182.1
—
182.1
182.1
Average interest rate (over TJLP)
—
—
—
—
5
%
—
5
%
—
Total Debentures, including current portion
9.1
154.7
—
—
182.1
—
345.9
345.9
ASSETS:
Short-term and Long-term investments
Fixed rate, denominated in U.S. dollars
136.3
28.8
—
—
—
—
165.1
165.1
Average interest rate
8.8
%
1.5
%
—
—
—
—
7.6
%
—
Variable rate, denominated in Brazilian
reais
1.7
—
—
—
—
—
1.7
1.7
Average interest rate (of CDI)
99
%
—
—
—
—
—
99
%
—
Total Short-term and Long-term investments
138.0
28.8
—
—
—
—
166.8
166.8
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Table of Contents
Foreign Currency Exchange Rate Risk
Braskem uses the Brazilian
real
as its functional currency. Its
liabilities that are exposed to foreign currency exchange rate risk are
denominated in U.S. dollars. To partially offset its risk of devaluation of the
Brazilian currency against the dollar, Braskem maintains several derivative
contracts. Because the Company borrows in the international markets to support
its operations and investments, it is exposed to market risks from changes in
foreign exchange and interest rates. Export sales, which generate receivables
payable in U.S. dollars, do not cover all of the Company's U.S. dollar
liabilities.
From March 1995 through January 1999, the
real
gradually devalued against
the U.S. dollar. In January 1999, the Central Bank abolished the band system
and allowed the
real
/U.S. dollar exchange rate to float freely. Since then,
the
real
/U.S. dollar exchange rate has been established mainly by the interbank
market and has fluctuated considerably. From December 31, 1998
through April 30, 2003, the U.S. dollar appreciated by approximately 139.1%
against the
real
.
The Central Bank has only intervened occasionally to control unstable
movements in the foreign exchange rate. The Company cannot predict, however,
whether the Central Bank will continue to let the
real
float freely, or if in
the future, the
real
will remain at its present level or devalue further.
The
table below provides information about the Company's significant
foreign currency exposure:
Foreign Currency Exchange Rate Sensitivity – Principal (Notional) Amount by
Expected Maturity
(in millions of U.S. dollars)
As of December 31, 2002
Expected Maturity Date
Fair
2003
2004
2005
2006
2007
Thereafter
Total
Value
LIABILITIES:
Short-term debt
Denominated in U.S. dollars
96.8
—
—
—
—
—
96.8
96.8
Denominated in Brazilian
reais
206.2
—
—
—
—
—
206.2
206.2
Total Short-term debt
303.0
—
—
—
—
—
303.0
303.0
Long-term debt, including
current portion (excluding Debentures):
Denominated in U.S. dollars
370.6
327.3
142.2
73.3
404.1
0.3
1,317.8
1,317.8
Denominated in Brazilian
reais
42.4
36.2
16.3
58.0
1.1
—
154.0
154.0
Total Long-term debt, including current portion
(excluding Debentures)
413.0
363.5
158.5
131.3
405.2
0.3
1,471.8
1,471.8
Debentures, including current portion
Denominated in Brazilian
reais
9.1
154.7
—
—
182.1
—
345.9
345.9
Total Debentures, including current portion
9.1
154.7
—
—
182.1
—
345.9
345.9
ASSETS:
Short-term and Long-term investments
Denominated in U.S. dollars
136.3
28.8
—
—
—
—
165.1
165.1
Denominated in Brazilian
reais
1.7
—
—
—
—
—
1.7
1.7
Total Short-term and Long-term investments
138.0
28.8
—
—
—
—
166.8
166.8
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\
The table below provides information
about the Company's derivative instruments:
As of December 31, 2002
Expected Maturity Date
Fair
2003
2004
2005
2006
2007
Thereafter
Total
Value
Cross currency and interest rate swaps
contracts
(notional amounts)
U.S. dollars to
reais
20.3
—
—
—
—
—
20.3
—
Average receiving rate in U.S. dollar
3.4
%
—
—
—
—
—
3.4
%
—
Average paying rate in
reais
(% of CDI)
103.8
%
—
—
—
—
—
103.8
%
—
Interest rate swaps contracts
Variable to fixed (U.S.$)
121.2
14.3
—
—
—
—
135.5
(1.5
)
Average receiving rate (LIBOR 6M)
LIBOR+0%
LIBOR+0%
—
—
—
—
LIBOR+0%
—
Average paying rate (U.S.$)
4.82
%
4.87
%
—
—
—
—
4.83
%
—
Foreign currency option
Purchased U.S.$ put options
47.4
—
—
—
—
—
47.4
0.4
Average strike prices (R$ to U.S.$1.00)
3.5
—
—
—
—
—
3.5
—
Sold U.S.$ put options
75.6
—
—
—
—
—
75.6
(0.3
)
Average strike prices (R$ to U.S.$1.00)
3.3
—
—
—
—
—
3.3
—
Purchased U.S.$ call options
28.2
—
—
—
—
—
28.2
0.2
Average strike prices (R$ to U.S.$1.00)
3.9
—
—
—
—
—
3.9
—
Sold U.S.$ call options
31.2
—
—
—
—
—
31.2
(4.7
)
Average strike prices (R$ to U.S.$1.00)
3.5
—
—
—
—
—
3.5
—
The
Company's foreign currency exposure gives rise to market risks
associated with exchange rate movements against the U.S. dollar. Foreign
currency-denominated liabilities at December 31, 2002 consisted of debt
denominated in U.S. dollars. The Company's foreign currency exposure
(short-term debt and long-term debt, including the current portion) was
U.S.$1,414.6 million at December 31, 2002 compared to U.S.$1,583.9 million at
December 31, 2001. This foreign currency exposure is represented by debt in
the form of notes, pre-export finance facilities and working capital loans. The
Company's derivative instruments partially protect exposure arising from the
U.S. dollar-denominated debt.
Commodity Prices
Although the majority of the Company's revenues are in
reais
, the Company
does not currently hedge its exposure to changes in the prices of
naphtha, its principal
raw material (which are linked to ARA quotations and the U.S. dollar-
real
exchange rate), in part because a portion of its sales in 2002 were
exports payable in foreign currencies and the prices of its polyethylene,
polypropylene and PVC products generally reflect changes in the international
market prices of these products. In periods of high volatility in the U.S.
dollar-
real
exchange rate, there is usually a lag between the time that the
U.S. dollar appreciates and the time that the Company can effectively pass on
such increased cost in
reais
to its customers in Brazil. Accordingly, if the
real
depreciates precipitously against the U.S. dollar in the future, the
Company may not immediately be able to pass on all of the corresponding
increases in its naphtha costs to its customers in Brazil, which could
materially adversely affect its results of operations and financial condition.
See "Item 3. Key Information—Risk Factors-Risks Relating to the Company—The
Company may be adversely affected by high naphtha costs."
The
discussion regarding Braskem's risk management activities
includes "forward looking statements" that involve risks and uncertainties. Actual
results could differ materially from those projected due to actual developments
in the global financial markets. The methods used by Braskem to analyze risks
discussed above should not be considered projections of future events or
losses. See "Cautionary Statement with Respect to Forward-Looking Statements."
Braskem also faces risks that are either nonfinancial or nonquantifiable. Such
risks principally include country risk and legal risk, and are not represented
in the above analyses.
147
Table of Contents
ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.
148
Table of Contents
PART II
ITEM 13.
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not applicable.
ITEM 14.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
During September 2002, the Company modified its bylaws in order to include
a tag-along right for all of the Company's shareholders, including its
non-voting preferred shareholders. The Company's bylaws provide that if the
controlling shareholder(s) sell(s), assign(s), or otherwise transfer(s) control
of the Company at any time, the acquiring party(ies) must agree in writing to
make a public tender offer for the remaining shares of the Company at the same
price per share paid to the controlling shareholder(s). The public tender
offer must be conducted within 30 days of the closing of the sale, assignment
or transfer to the acquiring party(ies) of the shares owned by the controlling
shareholder(s).
The acquiring party(ies) may disregard the tag-along rights of Braskem's
minority shareholders only if the transfer of control of the Company occurs as
the result of a court ruling or of a final decision by a Brazilian regulatory
authority, including, without limitation, CADE, that requires the controlling
shareholder(s) of the Company to sell, transfer or exchange all or part of
their shares in the Company.
ITEM 15.
CONTROLS AND PROCEDURES
The Company has established disclosure controls and procedures to ensure
that material information relating to the Company, including its consolidated
subsidiaries, is made known to the officers who certify the Company's financial
reports and to other members of the Company's senior management and the Board
of Directors.
Within the 90 days prior to the date of filing this Annual Report on Form
20-F, the Company, under the supervision and with the participation of its
management, including its Chief Executive Officer and its Chief Financial
Officer, evaluated the effectiveness of the design and operation of the
Company's "disclosure controls and procedures" (as defined in Rules 13a-14(c)
and 15d-14(c) under the Exchange Act). Based upon this evaluation, the Chief
Executive Officer and the Chief Financial Officer concluded that the Company's
disclosure controls and procedures are effective to ensure that the information
required to be disclosed by the Company (including its consolidated
subsidiaries) in reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the Commission's rules and forms. The Company has investments in certain
unconsolidated entities. As the Company does not control or manage these
entities, its disclosure controls and procedures with respect to such entities
are necessarily substantially more limited than those it maintains with respect
to its consolidated subsidiaries.
In designing and evaluating the Company's disclosure controls and
procedures, the Company's management, including its Chief Executive Officer and
its Chief Financial Officer, recognized that any controls and procedures, no
matter how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives, and the Company's management
necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures. Because of the inherent
limitations in all control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any,
within the Company have been detected.
There have been no significant changes in the Company's internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of their most recent evaluation, nor were any corrective
actions required with regard to significant deficiencies and material
weaknesses in the Company's internal controls.
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Table of Contents
ITEM 16A.
AUDIT COMMITTEE FINANCIAL EXPERT
The Company notes that pursuant to Exchange Act Release No. 34-47235, the
Company is not required to comply with Item 16A of Form 20-F until the Company
files its annual report for the fiscal year ending on or after July 15, 2003.
The Company is currently evaluating its compliance with the requirements of
Item 16A and expects that it will be able to make the disclosures required by
Item 16A not later than the date on which the Company files its annual report
for the fiscal year ending on or after July 15, 2003.
ITEM 16B.
CODE OF ETHICS
The
Company has adopted a code of ethics that applies to members of its Board of
Directors, Fiscal Council and Board of Executive Officers, as well as to its other employees,
and is posted on the Company's website at http://www.braskem.com.br. None of
the information on the Company's website is incorporated into or otherwise made part of
this annual report on Form 20-F.
150
Table of Contents
PART III
ITEM 17.
FINANCIAL STATEMENTS
The Company has responded to Item 18 in lieu of responding to this item.
ITEM 18.
FINANCIAL STATEMENTS
Reference is made to Item 19 for a list of all financial statements filed as part of this Registration Statement.
ITEM 19.
EXHIBITS
(a)
Financial Statements
Financial Statements of Braskem S.A.
Report of PricewaterhouseCoopers Auditores Independentes
F-2
Report of Deloitte Touche Tohmatsu
F-4
Consolidated Balance Sheets as of December 31, 2002 and 2001
F-6
Consolidated Statements of Operations for the years ended December 31, 2002, 2001 and 2000
F-8
Consolidated Statements of Changes in Shareholders' Equity for the years ended
December 31, 2002, 2001 and 2000
F-9
Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000
F-12
Notes to the Consolidated Financial Statements
F-14
151
Table of Contents
(b)
List of Exhibits
1.01
Bylaws, as amended on April 29, 2003.
2.01
Deposit Agreement, dated as of November 24, 1998, among the Company,
Citibank, N.A. and all holders and beneficial owners of ADSs evidenced by
ADRs issued thereunder.
2.02
The total amount of long-term debt securities of the Company and its
subsidiaries under any one instrument does not exceed 10% of the total
assets of the Company and its subsidiaries on a consolidated basis. The
Company agrees to furnish copies of any or all such instruments to the
Commission upon request.
3.01
Shareholders Agreement, dated as of July 27, 2001, between Odebrecht
Química and Petroquímica da Bahia S.A. (English translation)
3.02
First Amendment to Shareholders Agreement, dated as of July 29, 2002,
between Odebrecht Química and Petroquímica da Bahia S.A. (English
translation)
3.03
Memorandum of Understanding Regarding Shareholders Agreement, dated as of
July 3, 2001, among Odebrecht Química S.A., Petroquímica da Bahia S.A. and
Petrobras Química S.A. (English translation)
3.04
First Amendment to Memorandum of Understanding Regarding Shareholders
Agreement, dated July 26, 2002, among Odebrecht S.A and Petrobras Química
S.A., acknowledged by Petroquímica da Bahia S.A., Nordeste Química S.A.
and the Company. (English translation)
3.05
Memorandum of Understandings Regarding Shareholders Agreement, dated July
20, 2001, among Odebrecht Química S.A., Petroquímica da Bahia S.A.,
Petros—Fundação Petrobras de Seguridade Social and Previ—Caixa de
Previdência dos Funcionários do Banco do Brasil. (English translation)
4.01
Naphtha and Gas Oil Purchase and Sale Contract, dated as of June 22,
1978, between Petróleo Brasileiro S.A. and the Company (incorporated by
reference to Exhibit 3.04 to Form 20-FR of Copene Petroquímica do Nordeste
S.A. filed on September 30, 1998).
4.02
First Amendment to Naphtha and Gas Oil Purchase and Sale Contract, dated
as of February 8, 1993, to Naphtha and Gas Oil Purchase and Sale Contract
between Petróleo Brasileiro S.A. and the Company (incorporated by
reference to Exhibit 3.05 to Form 20-FR of Copene Petroquímica do Nordeste
S.A. filed on September 30, 1998).
4.03
Second Amendment to Naphtha and Gas Oil Purchase and Sale Contract, dated
as of February 24, 2003, between Petróleo Brasileiro S.A. and the Company.
(English translation)
4.04
Protocol and Justification of the Operation of Incorporation of OPP
Produtos Petroquímicos S.A. by the Company, dated July 26, 2002. (English
translation)
4.05
Protocol and Justification of the Operation of Incorporation of 52114
Participações S.A. by the Company, dated July 26, 2002. (English
translation)
4.06
Protocol and Justification of the Operation of Incorporation of
Nitrocarbono S.A. by the Company, dated March 10, 2003. (English
translation)
6.01
Statement regarding computation of earnings per share.
8.01
List of subsidiaries.
152
Table of Contents
10.01
Certification of Principal Executive Officer, dated June 30, 2003
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
1
10.02
Certification of Principal Financial Officer, dated June 30, 2003
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
1
1
A signed original of this written statement required by Section 906 of
the Sarbanes-Oxley Act of 2002 has been provided by Braskem S.A. and will
be retained by Braskem S.A. and furnished to the Securities and Exchange
Commission or its staff upon request.
153
Table of Contents
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for
filing on Form 20-F and that it has duly caused and authorized the undersigned
to sign this annual report to be signed on its behalf.
Date: June 30, 2003
BRASKEM S.A.
/s/José Carlos Grubisich Filho
José Carlos Grubisich Filho
Chief Executive Officer
154
Table of Contents
SECTION 302 CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER
I, José Carlos Grubisich Filho, Chief Executive Officer of Braskem, certify
that:
1.
I have reviewed this annual report on Form 20-F of Braskem S.A.;
2.
Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3.
Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;
4.
The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
a.
designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
b.
evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and
c.
presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5.
The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a.
all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b.
any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6.
The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: June 30, 2003
/s/José Carlos Grubisich Filho
José Carlos Grubisich Filho
Chief Executive Officer
155
Table of Contents
SECTION 302 CERTIFICATIONS OF CHIEF FINANCIAL OFFICER
I, Paul Elie Altit, Chief Financial Officer of Braskem S.A., certify that:
1.
I have reviewed this annual report on Form 20-F of Braskem S.A.;
2.
Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3.
Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;
4.
The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
a.
designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
b.
evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and
c.
presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5.
The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a.
all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b.
any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6.
The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: June 30, 2003
/s/Paul Elie Altit
Paul Elie Altit
Chief Financial Officer
156
Table of Contents
Braskem S.A.
Consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
and Report of Independent Accountants
F-1
Table of Contents
Report of Independent Accountants
To the Board of Directors and Shareholders
Braskem S.A.
1
We have audited the accompanying consolidated balance sheet of Braskem
S.A. and its subsidiaries as of December 31, 2002 and the related
consolidated statements of operations, of changes in shareholders' equity
and of cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
2
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Braskem S.A. and its subsidiaries at December 31, 2002 and the results of
their operations and their cash flows for the year then ended, in
conformity with accounting principles generally accepted in the United
States of America.
4
We previously audited and reported on the consolidated balance sheet of
OPP Produtos Petroquímicos S.A. and subsidiaries as of December 31, 2001
and the related consolidated statements of operations and of cash flows
for the period from July 25 to December 31, 2001, prior to their
restatement for the 2002 merger with Braskem S.A., which was accounted for
in a manner similar to a pooling of interests. The contribution of OPP
Produtos Petroquímicos S.A. and subsidiaries to net sales and loss
represented 26 percent and 74 percent of the respective restated totals.
Separate financial statements of the other companies included in the 2001
restated consolidated balance sheet and statements of operations and of
cash flows were audited and reported on separately by other auditors. We
also audited the combination of the accompanying consolidated balance
sheet and statements of operations and of cash flows for the year ended
December 31, 2001, after restatement for the merger of OPP Produtos
Petroquímicos S.A. with Braskem S.A.; in our opinion, such consolidated
statements have been properly combined on the basis described in Note
20(a)
of the notes to consolidated financial statements.
F-2
Table of Contents
5
As discussed in Note 2(s) to the consolidated financial statements, the
Company discontinued the amortization of goodwill in 2002, in connection
with the implementation of Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets."
6
As described in Note 5 to the consolidated financial statements, the
indirect subsidiary OPP Química S.A., based on the decision of the
Brazilian Supreme Court, recorded an excise tax gain of US$284,509,000 in
results for the year ended December 31, 2002.
7
As described in Notes 11(e) and 13(b) to the consolidated financial
statements, the Company and certain subsidiaries are involved in
significant legal proceedings involving exemption from the Brazilian
Social Contribution tax and a wage and salary adjustment clause in a
collective labor agreement with the chemical workers union in the state of
Bahia. Based on the opinions of legal counsel and management that losses
in these cases are not probable, no provision for losses has been
established for these proceedings.
8
As described in Note 1 to the consolidated financial statements, the
Company has been involved in a broad corporate reorganization process, as
part of the overall reorganization of the Brazilian petrochemical
industry. The Company and its subsidiaries may undergo further significant
economic and/or corporate changes during this process.
PricewaterhouseCoopers
Salvador, Brazil
Auditores Independentes
June 20, 2003
F-3
Table of Contents
INDEPENDENT AUDITORS' REPORT
To the shareholders of Braskem S.A. (formerly Copene — Petroquímica do Nordeste
S.A.)
1.
We have audited the balance sheet of Copene — Petroquímica do Nordeste
S.A. and subsidiaries (the "Company") as of December 31, 2001, and the
related statements of income, stockholders' equity, and cash flows for
each of the two years then ended. The financial statements as of December
31, 2001 and for the year then ended are not presented herein. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on the financial statements
based on our audits.
2.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
3.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Copene
- Petroquímica do Nordeste S.A. and subsidiaries as of December 31, 2001,
and the results of their operations and their cash flows for the two years
in the period ended December 31, 2001 in conformity with accounting
principles generally accepted in the United States of America.
4.
As mentioned in Note 11(e), the Company is discussing the
unconstitutionality of the Social Contribution Tax on profits with Federal
Tax Authorities at the Brazilian Supreme Court.
F-4
Table of Contents
5.
As discussed in Note 20(b), the accompanying financial statements as of
December 31, 2001 and for the year then ended have been restated to record
the portions of the Northeast Assets that were purchased by the Company
from the Odebrecht Group at their carry over basis.
Deloitte Touche Tohmatsu
Auditores Independentes
Salvador, Brazil
June 3, 2002 (except for the restatement described in Note 20(b), for which the
date is June 20, 2003)
F-5
Table of Contents
Braskem S.A.
Consolidated balance sheet
Expressed in thousands of U.S. dollars
December 31,
Assets
Note
2002
2001
Current assets
Cash and cash equivalents
35,516
109,161
Short-term investments
137,960
38,713
Trade accounts receivable, net
239,710
205,544
Receivables from related parties
3
615
95,909
Taxes recoverable
5
182,699
90,685
Insurance claims receivable
7
18,690
Inventories
4
230,603
268,822
Prepaid expenses
36,032
37,770
Prepayment of financing
8
27,854
Other
15,834
44,148
906,830
909,442
Investments
6
250,518
404,442
Goodwill, net
1
(c-iii)
120,084
184,887
Property, plant and equipment, net
7
1,183,651
1,758,554
Other non-current assets
Receivables from related parties
3
8,341
20,854
Intangible assets, net
17,692
22,490
Deferred charges, net
47,302
41,024
Restricted deposits for legal proceedings
37,456
28,416
Deferred income tax, net
11
(c)
61,208
79,753
Trade accounts receivable
10,847
15,953
Taxes recoverable
5
191,428
75,911
Inventories, net
4
22,553
8,248
Prepaid expenses
19,622
26,575
Long-term investments
28,825
64,954
Advances to suppliers
823
21,995
Prepayment of financing
25,882
Other
1,892
39,748
473,871
445,921
2,934,954
3,703,246
F-6
Table of Contents
Braskem S.A.
Consolidated balance sheet
Expressed in thousands of U.S. dollars
(continued)
December 31,
Liabilities and shareholders' equity
Note
2002
2001
Current liabilities
Suppliers
452,335
248,912
Payroll and related charges
22,709
57,733
Fair market value of derivative financial instruments
16
6,370
12,542
Income tax and social contribution
11
1,582
53
Other taxes
110,893
21,033
Short-term debt
8
303,074
249,894
Debentures
9
9,071
11,308
Current portion of long-term debt
8
413,039
578,776
Dividends and interest on own capital payable
761
Related parties
3
75,173
300,257
Advances from customers and current rights
78,039
Other
28,488
39,161
1,501,534
1,519,669
Long-term liabilities
Long-term debt
8
1,058,724
1,216,047
Debentures
9
336,859
204,118
Related parties
3
1,863
16,522
Minimum pension liability
12
10,502
Taxes and contributions payable
10
209,375
194,869
Deferred income taxes
11
16,914
23,766
Other
51,966
9,194
1,686,203
1,664,516
Commitments and contingencies
13
Minority interest
14
109,602
323,612
Shareholders' equity (deficit)
15
Share capital
Preferred shares - no par value
3,264,000 thousand shares authorized; class A shares -
2,160,764 thousand issued and 2,106, 144 thousand outstanding at
December 31,2002 (2001 - 1,134,265 thousand issued and 1,079,645
thousand outstanding); class B shares - 11,458 thousand shares issued
and outstanding at December 31, 2002 and 2001
314,319
302,004
Common
shares - no par value
1,836,000 thousand shares authorized;
1,226,091 thousand shares issued and outstanding at December 31, 2002,
646,693 thousand shares issued and outstanding at December 31, 2001
153,926
146,976
Treasury shares - 54,620 class A preferred shares
(15,412
)
(15,412
)
Unappropriated retained earnings
(609,232
)
135,750
Appropriated retained earnings (statutory reserves)
202,341
350,032
Cumulative other comprehensive loss
(408,327
)
(723,901
)
(362,385
)
195,449
2,934,954
3,703,246
The accompanying notes are an integral part of these consolidated financial statements.
F-7
Table of Contents
Braskem S.A.
Consolidated statement of operations
Expressed in thousands of U.S. dollars, except earnings (losses) per thousand shares
Year ended December 31,
Note
2002
2001
2000
Gross sales, net of allowances
Domestic
2,411,127
2,060,136
1,718,500
Export
18
536,375
198,752
167,665
2,947,502
2,258,888
1,886,165
Sales and value-added tax
(556,386
)
(486,997
)
(331,065
)
Net sales
2,391,116
1,771,891
1,555,100
Cost of sales
(1,900,987
)
(1,447,207
)
(1,252,357
)
Gross profit
490,129
324,684
302,743
Selling, general and administrative expenses
(252,475
)
(80,632
)
(77,035
)
Credit from Federal Excise Tax (IPI)
5
284,509
Operating income
522,163
244,052
225,708
Non-operating income (expenses)
Financial income
167,854
80,448
94,869
Financial expenses
(1,159,842
)
(294,593
)
(134,000
)
Other
(57,281
)
(26,312
)
(2,494
)
Income (loss) before income tax, equity in results of affiliates,
minority interest and change in accounting principle
(527,106
)
3,595
184,083
Income tax (expense) benefit
11
Current
(25,460
)
13,872
(303
)
Deferred
5,038
460
(2,634
)
Income (loss) before equity in results of affiliates,
minority interest and change in accounting principle
(547,528
)
17,927
181,146
Equity in earnings of affiliates, net
6
22,467
(6,090
)
6,889
Minority interest
14
65,024
(63,848
)
15
Income (loss) before change in accounting principle
(460,037
)
(52,011
)
188,050
Cumulative effect of a change in accounting principle,
net of income tax effect
1,767
Net income (loss) for the year
(460,037
)
(50,244
)
188,050
Basic and diluted earnings (losses) per thousand common shares
Income (loss) before income from change in accounting principle
(383.74
)
(59.00
)
106.10
Cumulative effect of a change in accounting principle
2.00
Earnings (losses) per thousand common shares
19
(383.74
)
(57.00
)
106.10
The accompanying notes are an integral part of these consolidated financial statements.
F-8
Table of Contents
Braskem S.A.
Consolidated statement of changes in shareholders' equity (deficit)
Expressed in thousands of shares and thousands of U.S. dollars, except per share amounts
Year ended December 31,
2002
2001
2000
Shares
US$
Shares
US$
Shares
US$
Class A preferred shares
At beginning of the year
2,083,457
284,795
1,134,265
166,962
1,134,265
166,898
Shares held in treasury
64
Balance before merger
2,083,457
284,795
1,134,265
166,962
1,134,265
166,962
Merger — Braskem shares exchanged for 52114 and OPP PP (Note 1(c-v))
77,307
12,315
949,192
117,833
At the end of the year
2,160,764
297,110
2,083,457
284,795
1,134,265
166,962
Class B preferred shares
At beginning and end of the year
11,458
17,209
11,458
17,209
11,458
17,209
Total preferred shares at the end of the year
2,172,222
314,319
2,094,915
302,004
1,145,723
184,171
Common shares
At beginning of the year
1,182,456
146,976
646,693
80,465
646,693
80,465
Merger — Braskem shares exchanged for 52114 and OPP PP (Note 1(c-v))
43,635
6,950
535,763
66,511
At the end of the year
1,226,091
153,926
1,182,456
146,976
646,693
80,465
Preferred class A treasury shares acquired
At beginning of the year
(54,620
)
(15,412
)
(54,620
)
(15,412
)
(55,520
)
(15,665
)
Disposal (acquisition)
900
253
At the end of the year
(54,620
)
(15,412
)
(54,620
)
(15,412
)
(54,620
)
(15,412
)
F-9
Table of Contents
Braskem S.A.
Consolidated statement of changes in shareholders' equity (deficit)
Expressed in thousands of U.S. dollars, except per share amounts
(continued)
Year ended December 31,
2002
2001
2000
Appropriated retained earnings (statutory reserve)
Legal reserve
At beginning of the year
42,098
49,956
48,241
Transfer from (to) unappropriated retained earnings
(42,098
)
(7,858
)
1,715
At the end of the year
42,098
49,956
Tax incentive reserve
At beginning of the year
307,934
350,593
342,183
Transfer from (to) unappropriated retained earnings
(105,593
)
(42,659
)
8,410
Total appropriated retained earnings at the end of the year
202,341
307,934
350,593
At the end of the year
202,341
350,032
400,549
Unappropriated retained earnings
At the beginning of the year
135,750
1,217,720
1,104,366
Net income (loss) for year
(460,037
)
(50,244
)
188,050
Dividends (per thousand shares):
Preferred class A (2002 - US$2.15; 2001 - US$23.33; 2000 - US$37.31)
(4,539
)
(25,183
)
(40,241
)
Preferred class B (2002 - US$4.20; 2001 - US$9.20; 2000 - US$28.30)
(48
)
(105
)
(325
)
Common shares (2001 - US$21.45; 2000 - US$37.30)
(13,870
)
(24,109
)
Distributions to shareholders:
Acquisition of Northeast Assets (Note 1(c-ii))
(149,367
)
OPP PP transaction (Note 1(c-v))
(577,821
)
Distributions by OPP PP
(428,049
)
(315,956
)
Transfer from (to) reserves, net
147,691
50,517
(10,125
)
Reversal of dividends from previous year
59
104
At the end of the year
(609,232
)
135,750
1,217,720
F-10
Table of Contents
Braskem S.A.
Consolidated statement of changes in shareholders' equity (deficit)
Expressed in thousands of U.S. dollars, except per share amounts
(continued)
Year ended December 31,
2002
2001
2000
Cumulative other comprehensive loss
Translation adjustment
At beginning of the year
(723,901
)
(695,817
)
(582,889
)
Net change in translation adjustment during the year
326,076
(28,084
)
(112,928
)
At the end of the year
(397,825
)
(723,901
)
(695,817
)
Minimum pension liability adjustment
(Note 12)
At the end of the year
(10,502
)
At the end of the year
(408,327
)
(723,901
)
(695,817
)
Comprehensive income (loss) for the year
Net income (loss) for the year
(460,037
)
(50,244
)
188,050
Translation adjustment
326,076
(28,084
)
(112,928
)
Minimum pension liability adjustment
(10,502
)
Comprehensive income (loss)
(144,463
)
(78,328
)
75,122
The accompanying notes are an integral part of these consolidated financial statements.
F-11
Table of Contents
Braskem S.A.
Consolidated statement of cash flow
Expressed in thousands of U.S. dollars
Year ended December 31,
Cash flows from operating activities
2002
2001
2000
Net income (loss) for the year
(460,037
)
(50,244
)
188,050
Adjustments to reconcile net income (loss) to cash provided operating activities
by (used in) operating activities
Depreciation
61,956
54,165
51,596
Amortization of intangible and deferred charges
17,222
5,001
4,376
Amortization of goodwill and fair market value adjustments
8,852
10,861
5,557
Equity in loss (earnings) of affiliates
(22,467
)
6,090
(6,889
)
Loss on disposal of property, plant and equipment, investments in affiliates
43,556
5,150
(379
)
Deferred tax expense (benefit)
(5,038
)
(460
)
2,634
Exchange and monetary variations, interest on related parties,
short and
long-term debt, net
786,601
(1,476
)
(28,834
)
Amortization of discount on BNDES loan
(12,383
)
Minority interest
(65,024
)
63,848
(15
)
Other
4,574
(259
)
368
Decrease (increase) in assets:
Trade accounts receivable
(135,969
)
93,828
(27,240
)
Taxes recoverable
(315,903
)
(54,900
)
(5,979
)
Inventories
(77,265
)
590
(20,059
)
Deferred charges
(30,534
)
(23,182
)
(9,204
)
Other
(33,696
)
(12,321
)
(9,798
)
Increase (decrease) in liabilities:
Suppliers
391,567
47,942
(5,022
)
Payroll and related charges and other taxes
102,290
(6,259
)
135
Fair market value of derivative financial instruments
(11,829
)
12,542
Income tax and social contribution
9,105
(29,394
)
Accrued liability for legal proceedings, net of restricted deposits
51,890
56,711
23,136
Advances from customers
77,584
Other
32,185
(41,498
)
4,175
Net cash provided by operating activities
429,620
124,352
166,608
Cash flows from investing activities
Short and long term investments
(113,448
)
437,061
(25,996
)
Additions to property, plant and equipment
(115,464
)
(146,275
)
(58,426
)
Additions to intangible assets
(3,433
)
534
Additions to investment in affiliate
(6,376
)
Additions to other investments
(13
)
(590
)
Proceeds from sale of investments, property, plant and equipment
7,130
27,569
18,230
Acquisitions
of Northeast Assets
(584,286
)
Cash
and cash equivalents of acquired businesses
147,620
Other
14,366
(156
)
301
Net cash used in investing activities
(217,238
)
(118,523
)
(65,891
)
F-12
Table of Contents
Braskem S.A.
Consolidated statements of cash flow
Expressed in thousand of U.S. dollars
(continued)
Year ended December 31,
2002
2001
2000
Cash flows from financing activities
Short-term debt:
Issuances
675,856
636,697
53,816
Repayments
(1,469,232
)
(417,420
)
(51,267
)
Long-term debt:
Issuances
778,485
627,292
103,381
Repayments
(500
)
(593,571
)
(168,874
)
Advances to export distributor
(31,386
)
Related parties:
Issuances
246,987
227,586
Repayments
(382,559
)
(371,771
)
Dividends paid to stockholders and minority interests
(10,719
)
(39,928
)
(65,790
)
Stock issue
4,140
Proceeds from (payments of) swap contracts
17,688
(21,428
)
Treasury shares sold (purchased)
317
Other
(2,179
)
4,633
Net cash provided by (used in) financing activities
(191,107
)
91,206
(149,845
)
Effect of exchange rate changes on cash
(94,920
)
(6,351
)
(3,308
)
Net increase (decrease) in cash and cash equivalents
(73,645
)
90,687
(52,436
)
Cash and cash equivalents, beginning of the year
109,161
18,474
70,910
Cash and cash equivalents, end of the year
35,516
109,161
18,474
Cash paid during the year for:
Interest paid
(274,841
)
(174,370
)
(66,132
)
Income tax
(154
)
(329
)
The accompanying notes are an integral part of these consolidated financial statements.
F-13
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
1 Operations
(a)
Braskem S.A. ("Braskem" or "the Company") is a corporation organized
under the laws of Brazil for the purpose of manufacturing, trading,
importing and exporting chemical and petrochemical products and fuels, as
well as producing and supplying steam, water, compressed air and electric
power to companies operating in the Camaçari Petrochemical Complex in
Bahia, Brazil, and the rendering of services to those companies. Braskem
is the new corporate name of Copene Petroquímica do Nordeste S.A.
("Copene"). The current organizational structure of Braskem is the result
of one of the most significant corporate restructurings undertaken in
Brazil, integrating six major Brazilian petrochemical companies:
Copene;
OPP Química S.A. ("OPP Química"); Trikem S.A. ("Trikem"); Proppet S.A.
("Proppet"); Nitrocarbono S.A. ("Nitrocarbono") and Polialden Petroquímica
S.A. ("Polialden"). Substantially all of Braskem's operations are located
in Brazil.
Braskem's business operations are organized into four business segments and are
managed on that basis:
I.
Basic Petrochemicals
- manufacture of basic petrochemical products such
as ethylene, propylene, benzene, para-xylene, butadiene and others, the
manufacture of fuel such as automotive gasoline and the production of
utility products such as steam, demineralized water, compressed air and
electric energy for its own consumption and for sale to other companies in
the Camaçari Petrochemical Complex. This segment operates five industrial
units in Camaçari. This segment depends largely on the supply of naphtha
by Petróleo Brasileiro S.A. — Petrobras.
II.
Polyolefins
- manufacture of polyethylene and polypropylene. This
segment operates four industrial units which produce polythylene
(two in Camaçari and two in the Southern Petrochemical Complex in
the Brazilian state of Rio Grande do Sul) and three industrial
units which produce polypropylene in the Southern Complex. This
segment's facilities in the Southern Petrochemical Complex depend
on the supply of raw materials by COPESUL — Companhia
Petroquímica do Sul ("Copesul").
III.
Vinyls
- manufacture of caustic soda, chlorine, ethylene
dichloride (EDC) and polyvinylchloride (PVC). This segment
manufactures caustic soda and chlorine in two industrial units
(Camaçari and Maceió in the Brazilian state of Alagoas), EDC in
one industrial unit (Maceió) and PVC in three industrial units
(Camaçari, Marechal Deodoro in Alagoas, and São Paulo).
F-14
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
IV.
Business Development
- primarily the manufacture of dimethyl
terephthalate (DMT), polyester terephthalate (PET) resins, and
intermediary products including caprolactam, cyclohexane,
cylohexanone and ammonium sulfate. This segment operates two
plants in the Camaçari Complex.
(b)
The Odebrecht and Mariani Groups, through Nova Camaçari Participações
S.A. ("Nova Camaçari"), were winners of the auction of the so-called
Econômico S.A. Empreendimentos ("ESAE") Assets, held in the city of São
Paulo on July 25, 2001. As a result, on a combined basis, the Odebrecht
and Mariani Groups acquired a controlling interest of Nordeste Química
S.A. ("Norquisa"), which, in turn, was the controlling shareholder of the
Company.
Additionally in July 2001, the Company acquired 100% share participation in
Copene Participações S.A. (formerly known as Conepar — Companhia Nordeste de
Participações ("Conepar")) which has 42.64% share participation in Polialden,
and 30.99% share participation in Politeno — Indústria e Comércio S.A.
("Politeno"). For further details, see Note 1(c-i).
Polialden's main objective is
to produce and sell high-density polyethylene,
while Politeno manufactures and sells low density polyethylene,
linear low-density polyethylene and high-density polyethylene. These companies are part of
the second generation companies of the Camaçari Petrochemical Complex.
In August 2002, Braskem issued new shares of stock to the Odebrecht and Mariani
Groups in exchange for their holdings in OPP Produtos Petroquímicos S.A. ("OPP
PP") and 52114 Participações S.A. ("52114"), respectively.
The principal assets of OPP PP included 81.3% of the capital stock and 100% of
the voting stock of OPP Química, a manufacturer of polyethylene and
polypropylene. OPP Química also held 36.3% of the capital stock and 65.9% of
the voting stock of Trikem, a manufacturer of caustic soda, chlorine, EDC and
PVC, and 29.5% of the capital stock and voting stock of Copesul, a company that
produces basic petrochemicals for the Southern Petrochemical Complex.
F-15
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
The principal asset of 52114 was
92.29% of the capital stock of Nitrocarbono, a manufacturer of caprolactam, ammonium sulfate and
caprolactam
by-products.
For further details on the OPP PP
and 52114 acquisitions, see Note 1(c-v).
As of December 31, 2002, Braskem had negative working capital in the amount of
US$ 594,704 and shareholders' deficit of
US$ 328,833. The consolidated balance
sheet includes US$ 54,559 related to advances on export contracts and advances
from foreign customers that will be amortized with future exports.
Approximately 70% of Braskem's loans are indexed to the U.S. dollar exchange
rate, which closed at R$ 3.5333 on December 31, 2002 but has since declined. To
reduce the demand for working capital, the Company's management plans to depend
on: 1) operating cash flows; 2) the extension of the payment dates of its main
supplier obligations; 3) new funding backed by export flows; and 4) the
extension of the maturity profile of its debts through new long-term
borrowings, including transactions in the negotiation phase.
(c)
Corporate restructuring
(i)
Auction of ESAE assets
The Odebrecht and Mariani Groups, through Nova Camaçari, were the winners of
the auction of the so-called ESAE Assets held in the city of São Paulo on July
25, 2001. As a result, the Odebrecht and Mariani Groups acquired control of
Norquisa, which, in turn, was the Company's parent company.
In order to maximize the value of the ESAE Assets in the auction, the Brazilian
Central Bank, as Liquidator of Banco Econômico (ESAE's controlling
shareholders), structured the so-called Protocol Group (Econômico, Mariani and
Odebrecht Groups) to sell the ESAE Assets jointly with a block of assets of the
members of the Protocol Group, which included their respective shareholdings in
Norquisa. Before July 2001, the Brazilian Central Bank announced two auctions
for the sale of the package of shareholdings, in December 2000 and March 2001,
both of which were inconclusive.
F-16
Table of Contents
\
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
The 3rd auction had as its objective the sale of 100% of the ESAE Assets for
the minimum price of R$ 785,000 thousand (equivalent to US$ 314,364). The
winner of the 3rd auction, upon buying ESAE, was obliged to respect the
tag-along rights of the remaining members of the Protocol Group and the
shareholders' agreement of Copene Participações S.A. As a result, under the
rules of the 3rd auction, Nova Camaçari acquired, through the exercise of the
tag-along right of sale, 31.92% and 11.76% of the capital of Copene
Participações S.A., which was held indirectly by the Odebrecht and Mariani
Groups and by BNDES Participações S.A. ("BNDESPAR"), respectively, and became
the holder of 100% of Copene Participações' capital. Furthermore, through the
exercise of the tag-along rights held by companies controlled by the Odebrecht
and Mariani Groups, Nova Camaçari acquired 100% of the capital of Proppet.
Copene Participações, in turn, controls Polialden (66.67% of voting capital and
42.64% of total capital) and has a significant shareholding in Politeno (35% of
voting capital and 30.99% of total capital), both of which are
second-generation operational companies which produce thermoplastic resins.
(ii)
Acquisition of Nova Camaçari by the Company
Based on the prior authorization by the Company's Board of Directors on July
24, 2001, the Company acquired Nova Camaçari after the 3rd auction for the
amount of US$ 40.00 (forty dollars). With this transaction, Braskem assumed
assets which Nova Camaçari had previously acquired in the context of the ESAE
Auction, as well as the respective liabilities, in the amount of US$ 573,463.
The amount paid for the acquisition of those investments is supported by the
economic and financial appraisal reports of independent experts.
The purchase of these assets
("Northeast Assets") by the Company was
pre-approved by the Board of Directors on July 24, 2001. The terms of approval
stipulated that, after the Company acquired Nova Camaçari, a first class
investment bank would independently appraise the cost of Nova Camaçari for the
purposes of adjusting the price paid by the Company, if applicable. The
selected bank prepared its appraisal using the same projections of resin and
raw material prices and the same macroeconomic indicators underlying the
formulation of the discount rate used in the independent appraisals of Nova
Camaçari. The remaining assumptions and the methodology used to obtain the
discount rate were selected by the bank.
F-17
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
The result of this appraisal was compatible with the other appraisals and was
approved during the Company's Board of Directors meeting on December 18, 2001.
As required by law, the market concentration notice relating to the change in
control of Copene (currently Braskem) was filed on a timely basis with the
antitrust authorities. Those authorities have imposed no restrictions on the
operations or decisions of the Company or its subsidiaries. The final decision
of the Administrative Economic Defense Council has not been issued, but the
opinions of the ministries of Finance and Justice are favorable.
(iii)
Accounting considerations
The transactions above have been accounted for by Braskem under the provisions
of Statement of Financial Accounting Standards ("SFAS") No. 141 and, accordingly, the consolidated financial statements of Braskem
as of and for the year ended December 31, 2001 include the results of
operations and cash flows related to Nova Camaçari, Intercapital Comércio e
Participações Ltda. ("Intercapital"), ESAE, Proppet, Conepar, Politeno and
Polialden (the Northeast Assets) from July 27, 2001 to December 31, 2001.
The acquisition was accounted for using the purchase method with the assets
acquired and liabilities assumed from third parties recorded at fair value. The
portions of the net assets which were already held by the Odebrecht Group were
maintained at their existing book values, and the excess of the proportional
amount of the purchase price over these book values has been considered a
distribution to the Odebrecht Group (Note 17). At the acquisition date, the
transaction resulted in goodwill of US$ 319,122. Since Nova Camaçari, ESAE,
Intercapital and Conepar are holding companies without any operations, the
purchase price relates to the operational assets acquired of Politeno,
Polialden and Proppet and liabilities assumed of all companies. The purchase
price allocation is shown as follows:
F-18
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
Politeno
Polialden
Proppet
Holdings
Total
Assets acquired
Current
33,139
68,723
15,463
5,057
122,382
Investments
11,432
940
789
2,020
15,181
Property, plant and equipment
41,620
23,910
82,936
5
148,471
Other non-current assets
5,899
2,526
3,464
224
12,113
92,090
96,099
102,652
7,306
298,147
Liabilities assumed
Current
20,793
12,259
56,313
19,623
108,988
Long-term
4,845
4,336
54,184
20,820
84,185
25,638
16,595
110,497
40,443
193,173
Fair value of net assets
66,452
79,504
(7,845
)
(33,137
)
104,974
Goodwill
319,122
Distribution to the
Odebrecht Group
149,367
Total purchase price
573,463
The goodwill has been allocated between Politeno and Polialden based on their
respective estimated fair values on the acquisition date.
The goodwill paid is based on the future profitability of the investments in
the companies acquired and in the expected operational and tax synergy of the
integration of the second-generation companies with the Company. The Company
evaluated the existence of any other intangible assets as defined by
SFAS No. 141,
and concluded that there are no other relevant intangible assets that should
have recognized in the accompanying consolidated financial statements.
F-19
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
The changes in the carrying amount of goodwill, including goodwill on equity investments, for the year ended December 31,
2002 and 2001, are as follows:
Balance as of January 1, 2001
5,044
Goodwill acquired during the year:
Acquisition of the assets and liabilities of Politeno,
Polialden and Proppet
319,122
Inclusion of goodwill balances already recorded by OPP
PP and subsidiaries
13,842
Amortization of goodwill during the year
(3,326
)
Translation gain
14,430
Balance as of December 31, 2001
349,112
Translation loss
(118,431
)
Impairment recorded during the year
(2,125
)
Balance as of December 31, 2002
228,556
The goodwill balance as of December 31, 2002 and 2001, has been recorded in the
following business segments:
December 31,
2002
2001
Basic Petrochemicals
2,035
Polyolefins
115,532
175,771
Vinyls
511
929
Business Development
4,041
6,152
Recognized
as goodwill
120,084
184,887
Recognized
as investments (equity investees)
108,472
164,225
228,556
349,112
F-20
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
(iv)
Funding of the purchase price
The immediate principal funding of the payment by Nova Camaçari of the
consideration for the assets acquired in the auction or otherwise in connection
with the auction of the ESAE Assets was through bridge loans to Nova Camaçari
from a syndicate of banks in the amount of US$ 481,103. This bridge loan was
repaid on December 28, 2001 and was substituted on the same date by the issue
of debentures, in the amount of US$ 269,350 and also by Prepaid Export
Financing in the amount of US$ 250,000.
The remaining funds, US$ 92,360, were obtained, through a Private Financing
Instrument, from companies within the controlling groups of Nova Camaçari, with
remuneration based on the same terms as those of the Bridge Loan, with interest
at the lower of 25.16% per year or 108.5% of the interbank certificate of
deposit (CDI) rate. As of December 31, 2001 the outstanding balance related to
these related parties loans is US$ 62,580 and is presented as current
liabilities.
(v)
Acquisitions of OPP PP and 52114
As described in Note 1(b), in August 2002 the Company acquired OPP PP and 52114
from the Odebrecht and Mariani Groups in exchange for 579,397,986 newly issued
common shares and 1,026,498,803 newly issued class "A"
preferred shares.
Because Braskem and OPP PP were both indirectly controlled by the Odebrecht
Group prior to the acquisition of OPP PP by Braskem, the acquisition was
accounted for in a manner similar to a pooling of interests. All assets and
liabilities of OPP PP and its subsidiaries have been included in Braskem's
consolidated financial statements at their existing carrying values.
Additionally, Braskem's consolidated financial statements for the year ended
December 31, 2001 have been retroactively restated to include OPP PP and its
subsidiaries as from the date on which common control first existed, July 25,
2001.
Although the terms of the exchange of Braskem and OPP PP shares were based on
the appraised economic value of each company, the transaction is recorded at
the U.S. GAAP book value of OPP PP's consolidated net assets as of July 25, 2001
as measured under
U.S. GAAP. As of that date, OPP PP's consolidated liabilities
exceeded its assets by US$ 393,477, and the issuance of Braskem shares to the
Odebrecht Group was therefore considered to be a distribution in that amount.
F-21
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
The Company's unaudited consolidated results of operations for the acquisition
of the Northeast Assets and the OPP PP transaction, assuming that they had
occurred at the beginning of 2001, are: net revenues of US$ 2,401,450, loss of
US$ 320,695, and basic and diluted loss per thousand shares of US$ 0.10. The
pro forma results of operations are for information purposes and are not
necessarily indicative of the Company's actual consolidated results of
operations that would have occurred had the acquisition of the Northeast Assets
and the OPP PP transaction taken place at the beginning of 2001.
The acquisition of 52114 in
exchange for company shares was accounted for using the purchase method with the
assets acquired and liabilities assumed recorded at fair value. The
purchase price of U.S.$6,950 was based on the fair value of Company
shares issued. The purchase
price allocation resulted in zero goodwill. As described in
Note 1(b), principal asset of 52114 was a 92.29% shareholding in
Nitrocarbono. The pro forma results of operations
for the 52114 acquisition, assuming that it had occurred at the beginning of
2001, would not be materially different from reported results.
2
Summary of significant accounting policies
(a)
Basis of presentation
The following aspects affect the comparability of the financial statements
between years:
Main aspects
Note
Corporate restructuring
Note 1(c)
Merger of OPP PP, with a base date of July 25, 2001
Note 1(c - v)
Recognition of the IPI credit on input materials with zero rate
Note 5
(i)
The consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of
America ("U.S. GAAP"), which differ in certain respects from the
accounting principles applied by the Company and its affiliates in their
financial statements prepared in accordance with accounting principles
prescribed by Brazilian Corporation Law ("Corporation Law") or for other
statutory purposes in Brazil.
F-22
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
(ii)
Shareholders' equity included in these financial statements differs from
that included in the financial statements prepared in accordance with
Corporation Law or for other statutory purposes in Brazil, principally as
a result of (i) differences between the United States dollar and the
indexes mandated over the years for indexation of such financial
statements and (ii) other adjustments made to reflect the requirements of
U.S. GAAP. As from January 1, 1996, financial statements prepared under
the Brazilian Corporation Law are no longer subject to indexation.
(b)
Remeasurement of financial statements
Although the Company transacts the majority of its business in Brazilian Reais
(R$), it has selected the United States dollar as its reporting currency. The
U.S. dollar amounts for all years presented herein have been converted from
Brazilian Reais amounts in accordance with the criteria set forth in U.S.
accounting standards (SFAS No.
52, "Foreign Currency Translation"). This conversion should not be construed as
representing that the amounts in Brazilian Reais actually represent or have
been, or could be, converted into U.S. dollars.
Management of the Company has concluded that the Brazilian economy is no longer
highly inflationary as from January 1, 1998, as the increase in the general
price index has been measured at less than 100% over the last three years. The
Company has adopted the Brazilian Real as its functional currency, as from
January 1, 1998. Upon effecting this substitution, the deferred tax asset
increased through a credit to cumulative other comprehensive income (loss) in
shareholders' equity.
(i)
Criteria adopted through December 31, 1997
•
Property, plant and equipment, accumulated depreciation, inventory, certain other
nonmonetary assets and shareholders' equity were remeasured at historical rates of
exchange, and the remaining assets and liabilities denominated in Brazilian Reais were
remeasured at period-end rates (R$1.1164 to US$1.00 at December 31, 1997).
•
Statement of operations accounts were remeasured at the average rate prevailing in the
month of the charge or credit to income, except those relating to assets remeasured at
historical rates, which were calculated based on the assets' U.S. dollar values.
F-23
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
•
Gains and losses resulting from the remeasurement of the financial statements were
included in results of the year.
•
Assets and liabilities denominated in foreign currencies were translated to U.S. dollars
at the official exchange rates reported by the Brazilian Central Bank at each balance
sheet date, and resulting gains and losses were included in results for the year as
foreign currency transaction gains or losses.
(ii)
Criteria adopted as from January 1, 1998
•
Property, plant and equipment, accumulated depreciation, inventory, and certain other
nonmonetary assets were converted from historical dollars to the functional currency
(Brazilian Reais) as of January 1, 1998 using the exchange rate in effect at that date
(R$1.1164 to US$1.00) and have been maintained in Brazilian Reais thereafter.
•
All assets and liabilities are translated from the functional currency to the reporting
currency using the official exchange rates reported by the Brazilian Central Bank at the
balance sheet date (R$3.5333 and R$2.3204 to US$1.00 at December 31, 2002 and 2001,
respectively).
•
Revenue, expenses and gains and losses are translated from the functional currency to
the reporting currency using the monthly weighted-average exchange rates for the period.
•
Shareholders' equity transactions are recorded at historical exchange rates.
•
Translation gains and losses are recorded in cumulative translation adjustment, a
component of cumulative other comprehensive income (loss) in shareholders' equity.
(c)
Basis of consolidation
(i)
Consolidation of subsidiaries
All subsidiaries in which the Company directly or indirectly controls the
voting capital have been consolidated.
F-24
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
In the consolidated financial statements, the intercompany assets, liabilities,
income, expenses and unrealized gains arising from transactions between
consolidated companies were eliminated. Minority interest in the equity and in
the results of subsidiaries has been segregated in the consolidated balance
sheet and statement of operations, respectively.
(ii)
Equity accounting
Investments in companies in which the Company owns 20% to 50% of the voting
capital are accounted for using the equity method of accounting (Note 6). The
Company's principal equity method investees include Copesul, Politeno, Cetrel S.A. — Empresa
de Proteção Ambiental ("Cetrel"), NORCELL S.A.
("Norcell"), Petroflex Indústria e Comércio S.A.
("Petroflex") and
Codeverde — Companhia de Desenvolvimento Rio Verde
("Codeverde").
(d)
Foreign currencies
Monetary assets and liabilities denominated in foreign currencies are
translated into United States dollars at the official exchange rates reported
by the Brazilian Central Bank at each balance sheet date. Translation gains and
losses of those assets and liabilities are included in the consolidated balance
sheet as "cumulative other comprehensive loss."
(e)
Cash and cash equivalents
Cash and cash equivalents are carried at cost plus accrued interest. Cash
equivalents consist principally of deposits having a ready market and an
original maturity of 90 days or less.
(f)
Trade accounts receivable
Trade accounts receivable are stated at estimated realizable values. An
allowance for doubtful accounts is provided in an amount considered by
management to be sufficient to meet probable future losses related to
uncollectible accounts and includes the entire amount of receivables in
litigation. The balance of the allowance was US$ 35,278 and US$ 16,611 at
December 31, 2002 and 2001, respectively.
F-25
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
(g)
Inventories
Inventories are stated at the lower of the average cost of purchase or
production and replacement or realizable values. Allowances for slow moving or
obsolete inventories are recorded when considered appropriate. Imports in
transit are stated at the accumulated cost of each import. The method of
determining cost is used consistently from year to year.
(h)
Intangible assets
Intangible assets, representing primarily production technology purchased from
third parties, are recorded at cost and are being amortized over a period of 5
- 10 years on a straight-line basis.
(i)
Property, plant and equipment
Property, plant and equipment are recorded at cost, including capitalized
interest incurred during the period of construction of major new facilities.
Depreciation is computed on a straight-line basis over the useful lives of the
assets as follows:
Annual
depreciation
rates (%)
Buildings and improvements
2.00 to 10.00
Plant and equipment
1.30 to 10.00
Fixtures and installations
2.27 to 20.00
Other
Up to 20
The useful lives of assets are
based on management estimates. Changes in the estimated useful lives
are reflected on a prospective basis, and the depreciation rates are
adjusted to those necessary to depreciate the remaining book value
over the remaining estimated life. The depreciation rates listed
above are stated as a percentage of the original cost and reflect
these changes in estimates.
The Company evaluates its property, plant and equipment for impairment whenever
events or changes in circumstances indicate that the carrying amount of such
assets may not be recoverable. Recoverability of such assets is measured by a
comparison of the carrying amount of the assets to future undiscounted net cash
flows expected to generated by the assets. If an asset is considered to be
impaired, the impairment to be recognized is measured as the excess of the
carrying amount of the assets over the fair value of the assets. In 2002 the
subsidiary Polialden recognized an impairment loss of US$1,566 relating to the
abandonment of its project to construct a polypropylene unit.
F-26
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
(j)
Plant maintenance
Routine maintenance and repair costs are expensed as incurred.
Planned major maintenance of the production facilities occurs every three to
five years, depending on the facility. Expenditures that extend the useful
life or improve the capacity or efficiency of the production facilities,
including materials and services, are recorded in deferred charges and
amortized over the expected period of benefit, generally three to five years.
Amortization of deferred charges amounted to US$ 16,185 in 2002, US$ 10,346 in
2001 and US$ 7,519 in 2000.
(k)
Goodwill
Goodwill represents costs in excess of fair values assigned to the underlying
net assets of companies acquired from third parties. Until December 31, 2001
the goodwill was amortized using the straight-line method over 10 years.
Goodwill generated after July 1, 2001 is not being amortized in 2001, and all
goodwill amortization was discontinued on January 1, 2002. Goodwill is subject
to annual impairment analysis, however, as determined by SFAS No. 142
"Goodwill and Other Intangible Assets" (Note 2(s)). Amortization of goodwill
is generally deductible for Brazilian income tax purposes.
(l)
Revenues and expenses
Revenues are recognized when: (i) the products have been transferred to the
customer and the risk of ownership has passed to the customer; (ii) persuasive
evidence of the basis of the sale exists; (iii) the price is fixed or
determinable; and (iv) collectibility is reasonably assured. Expenses and costs
are recognized on the accrual basis.
Shipping and handling costs are reported within selling, general and
administrative expenses and amounted to US$ 51,183, US$ 23,059 and US$ 6,635 in
the years ended December 31, 2002, 2001 and 2000. If these costs had been
classified in cost of sales, gross profit would have been US$ 438,946, US$
301,625 and US$ 296,108 in the years ended December 31, 2002, 2001 and 2000.
Advertising costs are expensed when incurred and were not significant in the
years ended December 31, 2002, 2001 and 2000.
F-27
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
(m)
Compensated absences
The liability for future compensation for employee vacations is fully accrued
as they are earned.
(n)
Income taxes
Income taxes in Brazil comprise Federal Income Tax and Social Contribution, a
federal tax based on income.
For the purposes of these financial statements, Braskem applied SFAS No. 109,
"Accounting for Income Taxes" for all periods presented.
A valuation allowance is provided to reduce or eliminate net deferred tax
assets when realization is not yet deemed more likely than not; the valuation
allowance is adjusted or reversed when management considers that realization is
reasonably assured.
(o)
Research and development
Research and development costs are expensed as incurred and recorded in the
statement of operations within selling, general and administrative expense.
Expenditure on research and development was US$ 5,682, US$ 4,097 and US$ 2,319,
for the years ended December 31, 2002, 2001 and 2000, respectively.
(p)
Financial instruments
Braskem and its subsidiaries utilize certain derivative instruments to manage
their exposure to fluctuations in the Brazilian Real/ U.S. dollar exchange
rate. Until December 31, 2000, the derivatives were recorded at spot market
rates prevailing at the balance sheet date with gains/loss recorded as net
financial expenses. Starting January 1, 2001, derivatives are recorded at fair
value, as determined by SFAS No. 133 "Accounting for Derivative Instruments
and Hedging Activities" (Note 16(b)).
Braskem calculates the fair value of financial instruments using quoted market
prices whenever available. When quoted market prices are not available for
various types of financial instruments (such as forwards, options and swaps),
Braskem uses standard pricing models with market-based inputs, which take into
account the present value of estimated future cash flows.
F-28
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
(q)
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. Estimates are used for, but
not limited to: fair values of assets and liabilities of acquired companies,
accounting for allowance for doubtful accounts, depreciation and amortization,
asset impairments, depreciable lives of assets, useful lives of intangible
assets, tax valuation allowances and contingencies.
(r)
Reclassifications
Certain amounts in the financial statements for prior years have been
reclassified to conform to the current year presentation.
(s)
Accounting change — Goodwill and other intangible assets
Effective January 1, 2002, the Company adopted SFAS No. 142, "Goodwill and
Other Intangible Assets." SFAS No. 142 no longer permits the amortization of
goodwill and indefinite-lived intangible assets. Instead, these assets must be
reviewed annually (or more frequently under various conditions) for impairment
in accordance with this statement. This impairment test uses a fair value
approach rather than the undiscounted cash flows approach. The goodwill
impairment test under SFAS No. 142 requires a two-step approach, which is
performed at the reporting unit level, as defined in SFAS No. 142. Step one
identifies potential impairments by comparing the fair value of the reporting
unit to its carrying amount. Step two, which is only performed if there is a
potential impairment, compares the carrying amount of the reporting unit's
goodwill to its implied value, as defined in SFAS No. 142.
F-29
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
If the carrying amount of the reporting unit's goodwill exceeds the implied
fair value of that goodwill, an impairment loss is recognized for an amount
equal to that excess. The amortization of goodwill included in investments in
affiliates and joint venture is no longer recorded, in accordance with the new
rules. Intangible assets that do not have indefinite lives are amortized over
their useful lives and reviewed for impairment in accordance with SFAS
No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets."
In accordance with SFAS No. 142, effective January 1, 2002, the Company ceased
amortizing existing goodwill, including goodwill recorded on equity
investments.
The Company performs the impairment test annually on December 31. The initial
application of the impairment test did not result in an impairment charge.
The following table presents the
impact of SFAS No. 142 on reported net income
(loss) had the standard been in effect in prior periods:
Years
ended December 31,
2001
2000
Reported net income (loss)
(50,244
)
188,050
Goodwill amortization
3,326
2,414
Adjusted net income (loss)
(46,918
)
190,464
Adjusted net income (loss) per thousand shares
(53.22
)
109.84
(t)
Environmental matters
Accruals for environmental matters are recorded when it is probable that the
liability has been incurred and the amount of the liability can be reasonably
estimated, based on current law and existing technologies. Environmental costs
are capitalized if the costs extend the life of the property, increase its
capacity, and/ or mitigate or prevent contamination from future operations.
F-30
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
(u)
Recently issued accounting pronouncements
In 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 143,
"Accounting for Asset Retirement Obligations." SFAS No. 143 is effective for
financial statements issued for fiscal years beginning after June 15, 2002.
Braskem will adopt SFAS No. 143 on January 1, 2003. The provisions of SFAS No.
143 require companies to record an asset and related liability for the costs
associated with the retirement of a long-lived tangible asset if a legal
liability to retire the asset exists. The Company has evaluated this new
pronouncement and does not expect that it will have a significant impact on the
Company's financial condition, liquidity or results of operations.
SFAS No. 145 addresses financial accounting and reporting for extinguishment of
debt. It supersedes SFAS No. 4, "Reporting Gains and Losses from Extinguishment
of Debt"; SFAS No. 44, "Accounting for Intangible Assets of Motor Carriers"
and SFAS No. 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund
Requirements." SFAS No. 145 also amends certain paragraphs of SFAS No. 13,
"Accounting for Leases." SFAS No. 145 is effective for fiscal years beginning
after May 15, 2002. The Company has evaluated this new pronouncement and does
not expect that it will have a significant impact on the Company's financial
condition, liquidity or results of operations.
In 2002, the FASB issued Interpretation (FIN) No. 45, "Guarantor's Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others." The initial recognition and measurement provisions of
FIN No. 45 apply on a prospective basis to guarantees issued or modified after
December 31, 2002. As required, Braskem adopted the disclosure requirements of
the Interpretation as of December 31, 2002 (see Note 13(c)). Braskem will
apply the initial recognition and measurement provisions on a prospective basis
effective January 1, 2003. The Interpretation modifies existing disclosure
requirements for most guarantees and requires that at the time a company issues
a guarantee, the Company must recognize an initial liability for the fair value
of the obligation it assumes under that guarantee. The Company has evaluated
this new pronouncement and does not expect that it will have a significant
impact on the Company's financial condition, liquidity or results of
operations.
F-31
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities," which nullifies EITF Issue 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit
an Activity." This statement, which is effective for exit or disposal
activities initiated after December 31, 2002, will change the measurement and
timing of costs associated with exit and disposal activities undertaken by the
Company. The Company has evaluated this new pronouncement and does not expect
that it will have a significant impact on the Company's financial condition,
liquidity or results of operations.
In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable
Interest Entities." FIN No. 46 clarifies the application of Accounting Research
Bulletin No. 51, "Consolidated Financial Statements," to certain entities in
which equity investors do not have the characteristics of a controlling
financial interest or in which equity investors do not bear the residual
economic risks. The interpretation applies to variable interest entities
("VIEs") created after January 31, 2003, and to VIEs in which an enterprise
obtains an interest after that date. It applies in the fiscal year or interim
period beginning after June 15, 2003, to VIEs in which an enterprise holds a
variable interest that was acquired before February 1, 2003. In financial
statements issued after January 31, 2003, the interpretation also requires an
enterprise to disclose the nature, purpose, size and activities of VIEs which
are reasonably possible to be within the scope of FIN No. 46, together with the
enterprise's maximum exposure to loss with respect to these entities. Braskem
is in the process of evaluating this new pronouncement and does not currently
expect that it will have a significant impact on the Company's financial
condition, liquidity or results of operations.
In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative instruments and Hedging Activities," which amends and clarifies
financial accounting and reporting for derivative instruments, including
certain derivative instruments embedded in other contracts (collectively
referred to as derivatives) and for hedging activities SFAS
No. 133, "Accounting
for Derivative Instruments and Hedging Activities." This Statement is effective
for contracts entered into or modified after June 30, 2003. The Company has
evaluated this new pronouncement and does not expect that it will have a
significant impact on the Company's financial condition, liquidity or results
of operations.
F-32
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
In May 2003, the FASB issued SFAS No. 150, "Accounting For Certain Financial
Instruments with Characteristics of Both Liabilities and Equity." This
Statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. It requires that an issuer classify a financial instrument that is
within its scope as a liability (or an asset in some circumstances). Many of
those instruments were previously classified as equity. This Statement is
effective for financial instruments entered into or modified after May 31,
2003. Braskem is in the process of evaluating this new pronouncement and does
not currently expect that it will have a significant impact on the Company's
financial condition, liquidity or results of operations.
F-33
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
3
Related parties
The balances with and the amount of the transactions to and from related
parties are as follows:
December 31, 2002
Other non
current
Current
Long-term
Current assets
assets
liabilities
liabilities
Receivables
Receivables
from
from
Advances
Accounts
Advances to
related
related
from
Related
Affiliates
receivable
suppliers
parties
parties
customers
Loans
Suppliers
Other
parties
Borealis OPP S.A.
5,290
1,705
1,408
Cetrel S.A.- Empresa de Proteção Ambiental
2
503
41
143
Codeverde — Companhia de Desenvolvimento Rio Verde
77
Copener — Copene Energética S.A.
518
1,363
COPESUL — Companhia Petroquímica do Sul
1,330
140,355
Copesul International Trading Inc.
72,840
Fenol Rio Química Ltda.
246
OCS — Odebrecht Administradora e Corretora
de Seguros Ltda.
18
Odebrecht S.A.
6
500
Petrobras — Petróleo Brasileiro S.A.
22
6,966
39,522
6,370
Petrobrás Distribuidora S.A.
40
45
14,121
Politeno Indústria e Comércio S.A.
14,394
Pronor Petroquímica S.A.
4,644
Termoelétrica do Planalto Paulista
297
Other
7
615
690
110
15,795
503
615
8,341
5,290
75,173
186,117
20,491
1,863
F-34
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
December 31, 2001
Other non
current
Long-term
Current assets
assets
Current liabilities
liabilities
Advances
Advances
Accounts
Advances to
for capital
from
receivable
suppliers
Loans
increase
Loans
Loans
customers
Suppliers
Loans
Affiliates
Borealis OPP S.A.
2,675
CBP — Companhia Brasileira de Poliuretanos
5,828
Cetrel S.A. — Empresa de Proteção Ambiental
87
5,203
1,192
1,124
5
Ciquine — Companhia Petroquímica do Nordeste
3,101
Codeverde — Companhia de Desenvolvimento Rio Verde
134
COPESUL — Companhia Petroquímica do Sul
86,511
Copesul International Trading Inc.
40,385
EDN — Estireno do Nordeste S.A.
1,885
Fenol Rio Química Ltda.
1,917
Isopol
— Petroquímica S.A.
543
NORCELL S.A.
789
2,119
Odebrecht S.A.
94,165
228,083
Oxiteno do Nordeste S.A.
3,207
Petrobras — Petróleo Brasileiro S.A.
4,939
9,448
41,616
10,597
Petrobras Distribuidora S.A.
705
1,716
3,801
Petroflex Indústria e Comércio S.A.
5,314
10,203
Polibrasil S.A. — Indústria e Comércio
4,490
Politeno Indústria e Comércio S.A.
8,597
Pronor Petroquímica S.A.
23,999
Other
552
79
45
32,868
5,203
95,909
134
20,854
300,257
2,675
130,632
16,522
F-35
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
Year ended December 31, 2002
Year ended December 31, 2001
Year ended December 31, 2000
Sales of
Purchases
Sales of
Purchases
Sales of
petrochemical
of
Financial
petrochemical
of
Financial
petrochemical
Purchases
Financial
products,
materials
income
products,
materials
income
products,
of materials
income
services
and
(expense)
services
and
(expense)
services
and
(expense)
and utilities
services
net
and utilities
services
net
and utilities
services
net
Afilliates
Borealis OPP S.A.
21,450
43,604
CBP
— Companhia Brasileira de Poliuretanos
(2,743
)
Cetrel S.A. — Empresa de Proteção Ambiental
36
4,602
122
2,284
32
1,776
Ciquine — Companhia Petroquímica do Nordeste
63,226
73,986
COPESUL — Companhia Petroquímica do Sul
10,915
408,367
11,664
418,770
Copesul
International Trading Inc.
19,996
9,869
EDN — Estireno do Nordeste S.A.
79,168
94,466
Isopol — Petroquímica S.A.
28,345
Nitrocarbono S.A.
76,900
OPP Química S.A.
133,576
Oxiteno do Nordeste S.A.
113,487
121,478
Petrobras Distribuidora S.A.
1,196
890
473
20,310
187
632
24,676
(1,718
)
Petrobras — Petróleo Brasileiro S.A.
756
722,908
167,858
23,475
1,245,980
2,265
47,961
1,222,765
(4,657
)
Petroflex Indústria e Comércio S.A.
74,001
1,242
75,491
1,478
79,832
1,665
Polialden Petroquímica S.A.
54,049
99,892
Polibrasil S.A. — Indústria e Comércio
90,257
121,323
Politeno Indústria e Comércio S.A.
181,720
207,292
227,873
Pronor ´Petroquímica S.A.
23,046
(323
)
Rionil Compostos Vinílicos Ltda.
6,252
4,286
Sansuy Indústrias Químicas S.A.
13,492
10,869
Trikem S.A.
182,735
1,672
8,448
Year ended December 31
309,818
1,156,763
169,100
800,509
1,697,213
864
1,289,031
1,250,889
3,738
F-36
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
(a)
Trade accounts receivable and suppliers include the balances of
transactions with related parties that result mainly from purchases and
sales of goods and services, which were realized using prices and terms
equivalent to the average terms and prices practiced in transactions with
third parties.
(b)
The balance of the loan from Copesul International Trading Inc. arises
from a specific arrangement negotiated with OPP Química and its subsidiary
Lantana, with rates equivalent to the market rates. Besides the US dollar
exchange variation, the average annual financial charges correspond to
7.76% to 8.25%.
(c)
The balance of the loan from Borealis OPP S.A. is subject to monthly
interest of 2.4%.
(d)
The balance of the loan to Petrobras -Petróleo Brasileiro S.A. is subject
to interest equal to the Long-Term Interest Rate (TJLP) plus 2% per annum.
(e)
The balances of the loans from CBP — Companhia Brasileira de Poliuretanos
and Pronor Petroquímica S.A. are subject to interest equal to 108.5% of
the interbank certificate of deposit (CDI) rate.
(f)
The balance of the loan payable to Odebrecht S.A. is subject to interest
of 20.75% per annum.
The price of ethylene purchased from Copesul results from a process that shares
the margin with the second generation companies of the petrochemical sector.
This process consists of apportioning the gross margin in proportion to the
return on investments. The prices practiced for the other products are
established based on various market factors, including international ones.
The price of naphtha, the main raw material of Braskem supplied by Petrobras,
is negotiated between Petrobras and the petrochemical companies, using as a
reference the price practiced in the European market. Braskem is also importing
naphtha at a volume equivalent to 30% of its consumption. The price reference
is the international market (ARA).
F-37
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
4 Inventories
December 31,
2002
2001
Finished goods
106,343
123,740
Work in process
7,727
2,835
Raw materials
40,081
38,268
Spare parts and maintenance suppliers
52,599
47,950
Advances to suppliers and sundry materials
27,032
43,555
Other
19,374
20,722
253,156
277,070
Long term inventories, net (*)
(22,553
)
(8,248
)
230,603
268,822
(*)
Based on turnover and detailed analysis, part of the inventory of spare
parts, maintenance supplies and others has been reclassified to long-term,
and an allowance for obsolescence of US$ 3,270 has been recorded in 2002.
No allowance was recorded at December 31, 2001.
5 Taxes recoverable
Taxes recoverable includes US$ 67,541 in current assets and US$ 148,842 in
noncurrent assets relating to a December 2002 Federal Supreme Court decision
which awarded the subsidiary OPP Química a federal excise tax (IPI) credit for
past purchases of materials with a 0% IPI rate. The total amount of the gain
from this decision was US$ 284,509, including approximately US$ 75,000 which
had already been offset against taxes payable in prior years. The tax
authorities have filed appeals to the Federal Supreme Court requesting
clarification of the calculation of the credit but not challenging its
existence.
This court decision affects only the OPP Química facility in the state of Rio
Grande do Sul. Several of the Company's subsidiaries have filed claims for the
same IPI credit at other facilities, but the disputed amounts will not be
recognized as gains before final decisions are issued by the courts.
F-38
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
6
Investments
The Company's investments in associated companies accounted for by the equity
method consist primarily of its shareholdings in Copesul, Politeno,
Cetrel,
Codeverde, Norcell and Petroflex. Summarized financial information of these
companies was as follows:
Shareholding
Shareholding in voting
in total capital (%)
capital (%)
Equity
in earnings of affiliates
Investment
2002
2001
2002
2001
2002
2001
2000
2002
2001
COPESUL — Companhia Petroquímica do Sul (*)
29.46
29.46
29.46
29.46
8,693
2,332
63,748
83,224
Politeno Indústria e Comércio S.A. (*)
30.99
30.99
35.00
35.00
5,834
3,956
41,080
69,963
CETREL S.A. — Empresa de Proteção Ambiental
35.57
36.35
35.57
36.35
(517
)
(1,188
)
(1,055
)
6,651
6,009
Codeverde Companhia de Desenvolvimento Rio Verde
35.42
35.39
35.42
35.39
(109
)
(112
)
(101
)
5,379
NORCELL S.A.
76.52
88.42
86.15
50.00
(475
)
841
9,811
13,684
48,251
Petroflex Indústria e Comércio S.A.
20.12
20.12
20.14
20.14
2,068
859
(1,766
)
7,472
8,233
Other
(185
)
(671
)
9,410
18,450
15,309
6,017
6,889
142,045
239,509
Goodwill
and purchase accounting adjustments
7,158
(12,107
)
108,473
164,933
22,467
(6,090
)
6,889
250,518
404,442
(*)
Recorded as an investment as from July 25, 2001.
F-39
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
Copesul is engaged in the manufacture, trade, import and export of basic
petrochemical products and the production and supply of assets, such as steam,
water, compressed air, electrical energy to the companies in the Southern
Petrochemical Complex in the state of Rio Grande do Sul, as well as providing
several services to these companies.
Politeno is engaged in the manufacture, processing, direct or indirect trade,
consignment, export, import and transportation of polyethylene, as well as the
participation in other companies. The main raw material for all of its products
is ethylene, which is currently provided by Braskem.
Cetrel provides environmental protection and waste treatment services to
companies in the Camaçari Petrochemical Complex.
Codeverde is a holding company for real estate in the state of Bahia.
Norcell is engaged in forestation activities. Although Braskem owns more than
50% of the voting shares, the terms of the Shareholders Agreement with Riocell
S.A. grant significant participating rights to Riocell. As a result, Braskem
does not have unilateral control over Norcell, and the investment is recorded
on the equity method.
Petroflex is a manufacturer of synthetic rubber.
F-40
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
Copesul's financial statements are summarized below:
December 31,
2002
2001
Balance sheet
Current assets
542,538
407,622
Property, plant and equipment
337,983
579,485
Other assets
61,040
83,479
941,561
1,070,586
Current liabilities
500,042
369,242
Long-term liabilities
225,129
418,847
Shareholders' equity
216,390
282,497
941,561
1,070,586
Years ended December 31,
2002
2001
Statement of operations
Net sales
967,346
1,042,174
Cost of sales
(782,113
)
(889,545
)
Gross profit
185,233
152,629
Operating expenses
(30,020
)
(40,755
)
Non-operating income (loss)
(104,443
)
(135,372
)
Income tax expense, net
4,723
8,599
Net income (loss)
55,493
(14,899
)
F-41
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
Reconciliation to investment balance and equity in earnings (loss):
December
31,
2002
2001
Proportional amount of affiliate's shareholders'
equity above
63,748
83,224
Goodwill, net
2,674
4,780
Purchase accounting adjustments, excluding goodwill
(947
)
Investment in affiliate
66,422
87,057
Years
ended December 31,
2002
2001
Braskem's equity in earnings (loss) of affiliate -
excluding preacquisition earnings
8,693
3,257
Amortization of goodwill, negative
goodwill and purchase accounting
adjustments
(925
)
Equity in earnings (loss) of affiliate
8,693
2,332
Goodwill relating to the
acquisition of the Company's original equity interest in
Copesul in May 1992, was amortized until December 31, 2001. Effective January
1, 2002, goodwill is no longer amortized.
F-42
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
7
Property, plant and equipment
December 31, 2002
December 31, 2001
Accumulated
Accumulated
Cost
depreciation
Net
Cost
depreciation
Net
Land
8,025
8,025
12,083
12,083
Buildings and improvements
189,784
(66,887
)
122,897
279,162
(98,319
)
180,843
Machinery and equipment
1,422,036
(491,265
)
930,771
1,971,139
(677,174
)
1,293,965
Furniture and fixtures
8,333
(7,951
)
382
48,423
(24,125
)
24,298
Vehicles
3,038
(2,447
)
591
3,257
(2,476
)
781
Computers
21,712
(14,983
)
6,729
5,796
(4,296
)
1,500
Others
40,761
(16,606
)
24,155
57,750
(28,944
)
28,806
Construction in progress
90,101
90,101
216,278
216,278
1,783,790
(600,139
)
1,183,651
2,593,888
(835,334
)
1,758,554
F-43
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
8 Debt
December 31,
Annual financial charges
2002
2001
Foreign currency
Foreign notes payable (Eurobonds)
US$125,000 due February 2004
US$ exchange variation + interest of 11.5%
27,978
14,478
US$100,000 due October 2004
US$ exchange variation + interest of 11.0%
55,718
101,925
US$150,000 due June 2007
US$ exchange variation + interest of 9.0%
150,188
150,225
US$250,000 due July 2007
US$ exchange variation + interest of 10.6%
261,806
328,071
Advances on export contracts
US$ exchange variation + interest from 3.8% to 12.0%
88,015
575,670
Fixed
US$ exchange variation + interest from 2.9% to 4.8% over LIBOR
266,891
16,315
Working capital
US$ exchange variation + interest from 1.7% to 4.9% over LIBOR or fixed interest from 3.1% to 12.0%
564,027
397,169
Local currency
Working capital
Interest from 0.3% to 8.7% + indexed monetary restatement (TJLP, IGP-M and CDI) or fixed interest from 3.0% to 12.0%
180,052
246,693
Fixed
FINAME
Fixed interest of 3.7% + indexed monetary restatement (TJLP)
824
160,191
BNDES
Fixed interest from 3.9% to 10.8% + indexed monetary
restatement (TJLP, TR and UMBNDES)
76,246
13,361
Other
TJLP + interest of 4.0% or IGP-M + interest of 4.5%
85,205
40,619
"Compror"
financing of purchases
17,887
1,774,837
2,044,717
Less: short-term debt
(303,074
)
(249,894
)
1,471,763
1,794,823
Less: current portion of long-term debt
(413,039
)
(578,776
)
Long-term debt
1,058,724
1,216,047
F-44
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
The weighted average interest rates on short-term debt as of December 31, 2002
were 17.33% per annum for Brazilian currency debt and 9.04% per annum for US
dollar debt.
The long-term amounts mature as follows:
December 31,
2002
2004
363,511
2005
158,501
2006
131,279
2007
405,233
2008
200
1,058,724
Loans related to the acquisition of fixed assets are backed by pledges of
property, plant and equipment, shares of stock and letters of guarantee from
management and shareholders. Certain working capital financing is backed by
letters of credit and bank guarantees. Shares of OPP have been pledged as
collateral for debt totaling US$ 34,861 at December 31, 2002. Shares of
Polialden and Politeno have been pledged as collateral for debt totaling US$
12,388 at December 31, 2002.
(a)
Foreign notes payable (Eurobonds)
(i)
Issued by the Company
In June 1997, Copene issued Eurobonds amounting to US$ 150,000 falling due in
ten years and bearing annual interest of 9% to be paid semiannually in the
months of June and December, commencing in December 1997.
(ii)
Eurobonds issued by OPP Petroquímica and Trikem
In February 1996, OPP Petroquímica (merged into OPP Química in December 2000)
issued Eurobonds in the amount of US$ 125,000 falling due at February 22, 2004
and bearing annual interest of 11.5% to be paid semiannually in the months of
February and August in each year, commencing in August 1996.
F-45
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
In October 1996, OPP Petroquímica issued Eurobonds in the amount of US$ 100,000
falling due at October 29, 2004 and bearing annual interest of 11% payable
semiannually in April and October of each year, commencing in April 1997.
Up to December 2002, the subsidiary Lantana had reacquired US$ 180,000 of the
OPP Petroquímica notes, and had resold US$ 37,000.
In July 1997, Trikem issued Eurobonds in the amount of US$ 250,000, falling due
on July 24, 2007 and with annual interest of 10.625% payable semiannually in
January and July of each year, commencing in January 1998. These notes grant
exclusively to Trikem the right to repurchase the Eurobonds on July 24 of each
year as from July 2002.
(b)
Long-term financing
(i)
Foreign currency
In December 2001, the Company obtained funds in the amount of US$ 250,000 for
the prepayment of exports, which funds were directed to partial payment of the
shares acquired in the auction of the ESAE Assets mentioned in Note
1(c-i).
This loan was placed in two tranches and structured by a pool of banks led by
ABN AMRO Real S.A. and Citibank S.A. The first tranche, in the amount of US$
80,000, has a settlement term up to December 2004 and is subject to interest of
3.75% per annum plus semiannual Libor, payable semiannually. The second
tranche, in the amount of US$ 170,000, has a settlement term up to 2006 and is
subject to interest of 4.75% per annum plus semiannual Libor, payable
semiannually. Amortization of the principal is linked with the Company's
exports and scheduled up to their related maturities. The debt balance, at
December 31, 2002, is US$ 250,047.
(ii)
Local currency
BNDES
Local currency fixed capital loans include to various loans related to the
expansion of the production capacity (including polyester — Proppet),
environmental projects, operation control centers, laboratory and waste
treatment station. These loans bear annual charges from 3.9% to 5%, plus the
Long-term Interest Rate (TJLP) disclosed by the Brazilian Central Bank. The
principal and charges are payable monthly up to July 2007.
F-46
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
The consolidated financial statements also include the financings obtained by
Copene Participações from BNDES for the purchase of shares in the privatization
of Polialden and Politeno, at the restated amount of US$ 12,388 (US$ 21,406 at
December 31, 2001). The balances are subject to the Referential Rate (TR) and
annual interest of 6.5% and are amortized semiannually in 20 installments from
February 1997 to August 2006. These loans are guaranteed by the shares
themselves and the surety of ESAE.
(c)
Working capital
(i)
Foreign currency
In the parent company, loans for working capital in foreign currency, in the
amount of US$ 168,265, refer to financings of imports of raw material (US$
13,614) and prepayments of export (US$ 154,651). These loans will be settled in
various dates up to June 2006, through a link with future Company exports.
In June 2000, OPP Petroquímica received an advance from a foreign customer
(prepayment of export) in the amount of US$ 75,300. In addition to the foreign
exchange variation, the advance is subject to annual interest of 1.75% over
semiannual LIBOR. The maximum term for shipment is December 2003, and the
current debt balance is US$ 49,676 thousand.
In December 2002, OPP Química received an advance from foreign customers
(prepayment of export), in the amount of US$ 97,200. In addition to the
exchange variation, the advance is subject to annual interest of 3.75% over
semiannual LIBOR. This contract is backed by a surety bond and will be paid
through partial semiannual shipments from June 2003 to June 2006. The current
debt balance is US$ 97,406.
Other financings in foreign currency of the subsidiary company OPP Química, in
the amount of US$ 196,000, are subject to the exchange rate variation and
annual average interest of 8.83%. These financings are backed by promissory
notes guaranteed by the directorate of OPP Química and ODEQUI.
F-47
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
(ii)
Local currency
In December 2002, Unibanco S.A. granted a loan for working capital in the
amount of R$ 150,000 thousand, falling due in January 2003 and bearing interest
of 100% of the CDI plus an annual spread of 0.25%, payable upon final maturity.
This contract is backed by a pledge of trade notes and sureties from the
directorate. At December 31, 2002, the debt balance of this loan amounts to US$
42,946.
Other local currency working capital loans of Braskem and its subsidiaries
refer to working capital loans and guaranteed account loans from various
financial institutions, which are backed by pledges of trade notes and sureties
from the directorate.
(d)
The amounts recorded in current assets and long-term receivables as
prepayment of financings correspond to the remittance of financial funds
made by CPC Cayman and Lantana for an advanced settlement of the
prepayment of exports, which are presented in short and long-term
liabilities at their gross amounts, without deducting these prepayments.
9
Debentures
December 31,
2002
2001
1st series — maturing October 1, 2006
Interest of 110.00% of CDI from 10/01/01 to 11/30/02, 118.33% of CDI from
12/1/02 to 10/01/04, thereafter to be deliberated by debenture
holders, with put option on 10/01/04
100,444
151,595
2nd series — maturing October 1, 2006
Interest of 13.25% p.a. over Market General Price Index (IGP-M)
63,362
63,831
Former OPP PP — maturing July 31, 2007
Interest of 5.00% p.a. over Long-Term, convertible into 606,907 thousand
shares
182,124
345,930
215,426
Less: current
(9,071
)
(11,308
)
Long-term
336,859
204,118
F-48
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
10
Taxes and contributions payable — Long-term liabilities
This balance comprises primarily taxes which Braskem and its subsidiaries are
challenging in the judicial system. Although management, supported by its legal
advisors, believes that the outcome of these lawsuits will be favorable to the
subsidiaries, the questioned amounts are accrued as liabilities and updated for
the variation in the SELIC interest rate. These liabilities will be reversed
when Braskem and its subsidiaries receive a final favorable decision on the
specific cases.
11
Income tax and social contribution on net income
(a)
Tax rates
Income taxes in Brazil include Federal Income Tax and Social Contribution on
Net Income ("CSL"). There is no state or local income taxes in Brazil. The
statutory rates applicable in each period were as follows (in percentages):
February to
2002
2001
January, 2000
December, 2000
Federal income tax
25.00
25.00
25.00
25.00
Social contribution
9.00
9.00
12.00
9.00
Composite marginal income tax rate
34.00
34.00
37.00
34.00
F-49
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
(b)
Income tax reconciliation
Year ended December 31,
2002
2001
2000
Income (loss) before income tax, equity in results
of affiliates, minority interest
and change in accounting principle
(527,106
)
3,595
184,083
Income tax and social contribution benefit (expense)
at statutory rate - 34%
179,216
(1,222
)
(62,588
)
Income tax on permanent differences
4,867
(74,770
)
Tax effect of social contribution
tax exemption ((i) below)
(36,305
)
6,255
16,285
Benefit from tax holidays ((ii) below)
250
1,574
41,313
Net change in valuation allowance
(166,720
)
81,342
1,648
Other
(1,730
)
1,153
405
Tax (expense) benefit, per consolidated
statement of operations
(20,422
)
14,332
(2,937
)
(i)
Braskem and its subsidiaries OPP Química and Trikem, have obtained
judicial orders exempting them from the CSL (Note 11(e)).
(ii)
Certain of the production facilities have qualified for income tax
incentives which provide full or partial exemptions from income tax on
"exploration profit" for a fixed period of time (Note 11(d)).
F-50
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
(c)
Deferred income tax
Deferred tax assets (liabilities) are comprised of the following:
December 31,
2002
2001
Deferred tax assets
Net operating loss carryforwards
133,760
133,628
Permanent Assets
(15,776
)
1,089
Deferred expenses
28,520
32,791
Investment in Copesul
183
653
Nondeductible accrued expenses and other temporary differences
138,960
92,490
Gross deferred tax assets
285,647
260,651
Deferred tax liabilities
Accelerated depreciation
(2,914
)
(4,691
)
Accrued liability for legal proceedings,
net of restricted deposits
(1,379
)
Inventories
(2,393
)
Loan discount
(2,619
)
Other temporary differences
(8,369
)
(23,441
)
Gross deferred tax liabilities
(13,676
)
(32,130
)
Valuation allowance
(227,677
)
(172,534
)
Net deferred tax asset
44,294
55,987
Long-term assets
61,208
79,753
Long-term liabilities
(16,914
)
(23,766
)
44,294
55,987
F-51
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
At December 31, 2002, Braskem and its subsidiaries have tax loss carryforwards
totaling US$ 535,040, of which US$ 3,129 have been used as the basis for
recognizing net deferred tax assets and the remainder have a full valuation
allowance. These tax loss carryforwards do not expire, but their utilization is
limited to 30% of the taxable income in a subsequent year, and the balances are
not indexed to inflation or exchange rates. Tax loss carryforwards are also
lost if a corporate entity is extinguished such as through a merger.
Furthermore, the net incremental benefit of these tax losses is limited in the
medium term, since several industrial units are already benefited by income tax
exemptions and reduced income tax rates, as described below.
(d)
Corporate income tax holidays
The Brazilian Federal government offers full or partial income tax holidays to
companies which construct or expand facilities in northeastern Brazil. Several
of the plants operated by Braskem and its subsidiaries have been granted such
tax holidays, as summarized below:
%exemption
or reduction in
Expiration
Location
Product
income tax rate
date
Camaçari
Basic petrochemicals and utilities
75
%
2011
Camaçari
Polyethylene
75
%
2011
Camaçari
PVC
100
%
2004
Marechal Deodoro
PVC
100
%
2008
F-52
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
In addition, the caustic soda and EDC plants in Bahia and Alagoas and the DMT
and caprolactam plants in Bahia are eligible for partial tax holidays as
follows:
% reduction
in income
Period
tax rate
January 1, 1998 to December 31, 2003
37.5
%
January 1, 2004 to December 31, 2008
25.0
%
January 1, 2009 to December 31, 2013
12.5
%
The benefit of the tax holiday may not be distributed to stockholders and is
recorded in a capital reserve (appropriated retained earnings), which can only
be used to increase capital or absorb losses.
(e)
Social contribution
The subsidiary OPP Química obtained a final court decision which exempted it
from the social contribution.
In 1992, Braskem and the current subsidiaries Trikem and Polialden also
received final favorable decisions exempting them from the social contribution,
but the government filed actions to rescind those decisions. In 1997, the
Superior Court of Justice (STJ) overturned the 1992 decision. Since then the
companies have filed several appeals to reverse this unfavorable decision.
Based on the opinion of legal counsel, the appeals should be successful in
maintaining the companies' exemption. If, however, the appeals are not
successful, legal counsel has indicated that the loss of the exemption will be
effective only as from the date of a final unfavorable decision and may not be
applied retroactively. For this reason, no liability has been recorded. If a
retroactive claim were made by the government, the exposure to Braskem and its
subsidiaries would be approximately US$ 67,500, including interest but
excluding fines.
F-53
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
12
Pension plan
(a)
ODEPREV — Odebrecht Previdência
Several of the Company's subsidiaries are sponsors of a defined contribution
pension plan founded by the Odebrecht Group. The consolidated contribution for
the year ended December 31, 2002 was US$ 289.
(b)
Fundação Petrobras de Seguridade Social — PETROS
Braskem and its subsidiary Trikem sponsor a defined benefit plan for their
employees. The plan is managed by the Fundação Petrobras de Seguridade Social
("PETROS"). Its main objectives are to complement retirement benefits provided
by the government and to implement social assistance programs supported by the
sponsoring companies. The sponsoring companies and their employees pay monthly
contributions to PETROS based on their employees' remuneration.
Financial and actuarial information for the pension plan, as provided by the
independent actuary, are provided below:
2002
2001
2000
Components of net pension cost
Service cost
1,701
1,927
1,679
Interest cost
4,354
5,370
5,437
Total
6,055
7,297
7,116
Return on assets
Actual
(15,377
)
(10,039
)
(11,035
)
Gain (loss) deferred
12,194
5,939
6,647
Expected
(3,183
)
(4,100
)
(4,388
)
Amortizations
Unrecognized net transition asset, being
Recognized over 15 years from January 1, 1989
(620
)
(727
)
(929
)
Actuarial losses (gains)
1,703
Employee contributions
(1,085
)
(1,568
)
(1,290
)
Net periodic pension cost
2,870
902
509
F-54
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
2002
2001
2000
Discount rate — %
13
13
13
Salary increase rate — %
9
9.3
9.3
Return on assets — %
13
13
13
Projected benefit obligation
(68,328
)
(91,668
)
(89,504
)
Fair value of plan assets
55,942
68,503
95,400
Funded (unfunded) position
(12,386
)
(23,165
)
5,896
Unrecognized net obligation
(514
)
(1,565
)
(2,786
)
Unrecognized net (gain) loss
12,715
30,724
23,747
Prepaid (accrued) pension
(185
)
5,994
26,857
Changes in benefit obligation
Benefit obligation at the beginning of the year
91,668
89,504
90,619
Service cost
1,701
1,927
1,679
Interest cost
4,354
5,370
5,437
Actuarial loss
8,697
16,652
6,939
Benefit payments
(4,954
)
(6,470
)
(7,323
)
Effect of exchange rate changes
(33,138
)
(15,315
)
(7,847
)
Benefit obligation at the end of the year
68,328
91,668
89,504
Change in plan assets
Fair value of plan assets at the beginning of
the year
68,503
95,400
96,310
Actual return on plan assets
15,377
10,039
11,035
Employer contribution
1,698
1,907
2,026
Participants contribution
1,085
1,568
1,290
Benefit payments
(4,954
)
(6,470
)
(7,323
)
Loss on segregation of assets
(18,893
)
Effect of exchange rate changes
(25,767
)
(15,048
)
(7,938
)
Fair value of plan assets at the end of the year
55,942
68,503
95,400
In 2002 Braskem recognized a minimum pension liability of US$ 10,502,
representing the difference between the accumulated benefit obligation and the
fair value of plan assets. This liability was substantially recognized through
a charge to a shareholders' equity account.
F-55
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
(c)
PREVINOR — Associação de Previdência Privada
Braskem and its subsidiaries
Polialden and Nitrocarbono sponsor defined benefit and defined
contribution plans which are managed by PREVINOR —
Associação de Previdência Privada. Contributions to
the defined contribution plans totaled US$ 308 in the year ended
December 31, 2002 (US$ 150 in 2002).
Financial and actuarial
information for the defined benefit pension plans, as provided by the
independent actuary, are provided below:
2002
2001
Components of net pension cost
Service cost
19
8
Interest cost
564
237
Total
583
245
Return on assets
Actual
(457
)
(776
)
Gain (loss) deferred
(364
)
369
Expected
(821
)
(407
)
F-56
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
2002
2001
Amortizations
Amortization
of prior service cost
(71
)
(80
)
Actuarial losses (gains)
35
10
Net periodic pension cost
(274
)
(232
)
Discount rate — %
12.4
12.4
Salary increase rate — %
7.1
7.1
Return on assets — %
17.1
17.1
Projected benefit obligation
(4,129
)
(5,503
)
Fair value of plan assets
4,490
5,679
Funded (unfunded) position
361
176
Unrecognized net obligation
(705
)
(1,045
)
Unrecognized net (gain) loss
833
1,104
Prepaid (accrued) pension
489
235
Changes in benefit obligation
Benefit obligation at the beginning of the year
5,503
4,662
Service cost
19
8
Interest cost
564
237
Actuarial loss
(273
)
734
Benefit payments
(122
)
(138
)
Effect
of business acquisitions
406
Effect of exchange rate changes
(1,968
)
Benefit obligation at the end of the year
4,129
5,503
Change in plan assets
Fair value of plan assets at the beginning of
the year
5,679
5,788
Actual return on plan assets
457
38
Employer contribution
5
1
Benefit payments
(122
)
(138
)
Expenses
paid
(10
)
Effect
of business acquisitions
550
Effect of exchange rate changes
(2,079
)
Fair value of plan assets at the end of the year
4,490
5,679
F-57
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
13
Commitments and contingencies
(a)
Commitments
Purchase commitments
Braskem and its subsidiaries have electric power purchase contracts for the
consumption of energy by its industrial plants located in the states of Alagoas
and Bahia. The minimum annual commitment under these contracts is approximately
US$ 17,000 and the contracts extend for five years.
The Company purchases ethylene and propylene for its units in the Southern
Petrochemical Complex from Copesul under a long-term contract through 2014.
The minimum annual purchase commitment is 268,200 metric tons of ethylene and
262,200 metric tons of propylene. If the minimum is not purchased the Company
must pay for the unpurchased amount at 40% of the current price. Based on 40%
of the December 31, 2002 prices, this minimum commitment is US$ 93,401 per
year.
(b)
Contingencies
Braskem and its subsidiaries are defendants in various civil and labor cases.
Based on the advice of its legal counsel, management has established
liabilities for those cases in which an unfavorable outcome is probable.
Descriptions of the more significant cases follow.
F-58
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
(i)
Collective labor agreement
The chemical workers union in the Camaçari region (SINDIQUÍMICA) and the
syndicate of chemical manufacturers in the same region (SINPEQ) are disputing
in the courts whether the wage and salary indexation clause in their collective
labor agreement was overruled by a 1990 economic policy law which restricted
wage and salary increases. Braskem, Trikem, Polialden, Nitrocarbono and
Politeno operated plants in the region in 1990 and are members of SINPEQ. The
union is requesting that salaries and wages be adjusted retroactively and
cumulatively since 1990.
The most recent ruling, in December 2002, was favorable to SINPEQ and
established that the economic policy law overruled the collective labor
agreement. Nevertheless, the decision is still subject to appeal.
Management, based on the opinion of its legal advisers, believes that the
SINPEQ position will prevail. As a result, no loss has been accrued for this
contingency.
(ii)
Polialden preferred shareholders
Banco Fator, as the administrator of Fundo Fator Sinergia, a mutual fund, filed
a Declaratory Action to obtain a ruling that the preferred shares of Polialden
do not have fixed dividends and therefore are entitled to participate in the
distribution of profits on the same basis as common shareholders. Polialden
management, supported by the decision of the Brazilian Securities Commission
(CVM) and the opinion of its legal advisors, understands that no additional
dividend for preferred shares is due, and Polialden is contesting the lawsuit,
which is pending judgement.
Jurisprudence in similar cases is generally favorable to Polialden. However, in
August 2001, contrary to the opinion about the matter issued by the CVM in
August 2000, as well as opinions of renowned jurists, the 4th Panel of the
Higher Court of Justice (STJ) decided, in a Special Appeal of a shareholder, to
grant the plaintiff participation in the payment of dividends on an equal basis
with common shares. This decision is not the final decision and is being
appealed by Polialden. On July 28, 2002, Polialden made a judicial deposit to
cover its exposure (US$ 1,603) to possible losses from the lawsuit.
F-59
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
(iii)
Civil litigation of OPP Química and Trikem
The subsidiaries OPP Química and Trikem have civil claims about various
matters, which amount to approximately US$ 71,300. Management and its internal
legal advisors, supported by recent opinions of its external legal advisors,
believe that losses on these claims are not probable, and no liability has been
recorded.
(c)
Guarantees
In the ordinary course of business, the Company and its subsidiaries provide
guarantees to financial institutions which provide financing to certain
customers. At December 31, 2002, the nominal value of the guaranteed customer
balances was US$ 122,164.
14
Minority interest
Minority interest relates to the interest of minority shareholders in the
capital of Trikem, Companhia Alagoas Industrial — CINAL, CPP — Companhia
Petroquímica Paulista, Polialden, Copene Monômeros Especiais S.A., Tegal
Terminal de Gases Ltda and Nitrocarbono S.A..
15
Shareholders' equity
(a)
Capital
Preferred shares are not convertible into common shares and do not carry voting
rights, but they have priority to a minimum non-cumulative annual dividend of
6%, depending on the availability of income for distribution. Only the
preferred "A" shares have equal participation with the common shares in the
remaining income, and this right exists only after the payment of dividends to
the holders of preferred shares. The preferred "A" shares also have equal
rights with the common shares to receive distributions of shares arising from
the capitalization of other reserves.
F-60
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
Shares subscribed through the Northeast Investment Fund (FINOR) tax incentives
(preferred "B" shares) do not have preferential rights in the event of new
share subscriptions. Subsequent to the expiration of the period of
non-transferability as foreseen in special legislation, these shares may be
converted into preferred "A" shares at any time, at the ratio of two preferred
"B" shares for one preferred "A" share.
In the event of dissolution of the
Company, the preferred "A" and "B" shares
have priority to capital reimbursement.
(b)
Dividends
Shareholders have the right to a mandatory minimum dividend of 25% of net
income, computed in accordance with the terms of the Brazilian Corporate Law
and payable in Brazilian Reais.
As described in the Memoranda of Understanding for Shareholders' Agreements
signed by (i) Odebrecht Química S.A., Petroquímica da Bahia S.A., Fundação
Petrobras de Seguridade Social — PETROS and Previ — Caixa de Previdência dos
Funcionários do Banco do Brasil and (ii) Odebrecht Química S.A., Petroquímica
da Bahia S.A. and Petrobras Química S.A. — Petroquisa, on July 20 and July 3,
2001, respectively, Braskem must distribute dividends in a percentage not less
than 50% of available net income of each year, as long as remaining reserves
are sufficient to maintain efficient operations and development of the
Company's business.
According to the terms agreed in the Particular Instrument of Re-Ratification
of a Particular Deed of Issue of Non-convertible Debentures with Floating
Guarantee of the Tenth Issue and in the Export Prepayment Credit Agreement, the
payment of dividends, interest on own capital or any other participation in
profits is limited to at most 50% of net income for the year or 6% of the unit
value of the preferred "A" and "B" shares, whichever is higher.
In accordance with the Company's statutes, Braskem may pay interest on its own
capital to its shareholders, within the terms of Article 9, paragraph 7, of Law
9249/1995. Interest, when paid or credited, will be considered as part of the
priority dividend on preferred shares as well as part of the minimum dividend
requirement.
(c)
Shares held in treasury
On December 31, 2002, Braskem
held in treasury 54,620 thousand class "A"
preferred shares at the total cost of US$ 15,412.
F-61
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
(d)
American Depositary Receipt (ADR) Program
On October 20, 1998, the Company obtained a Level II registration with the
Securities and Exchange Commission (SEC) and, on December 21, 1998, started
trading American Depositary Receipts (ADRs) on the New York Stock Exchange
(NYSE), as follows:
Ø
Type of shares: preferred class "A"
Ø
Each ADR represents 50 (fifty) preferred "A" shares
Ø
The shares are negotiated as ADRs under the symbol "BAK" at the NYSE
Ø
Depositary Bank overseas: Citibank N.A. — New York branch
Ø
Custodian Bank in Brazil: Banco Itaú S.A.
16
Financial instruments
Braskem and its subsidiary companies engage in transactions involving financial
instruments to manage the financial requirements of their operations, to
supplement cash flow requirements, to guarantee the supply of raw materials and
to hedge their U.S. dollar denominated debt. Risk management is carried out by
adopting financial market mechanisms which reduce the exposure of the Company's
assets and liabilities, protecting its equity.
The net book values of the financial assets and liabilities of Braskem and its
subsidiaries at December 31, 2002 are equivalent to their approximate market
values. The main financial instruments are comprised of the following accounts:
(a)
Investments
The market values of the investments in the associated companies Copesul and
Petroflex, the shares of which are traded in the stock exchange, were estimated
based on the final market quotations on the São Paulo Stock Exchange, where
most of the shares are traded. This estimate does not necessarily reflect the
realizable value of a representative lot of shares.
At December 31, 2002, the market value of these shares held by Braskem and its
subsidiaries is US$ 55,111 for Copesul and US$ 4,836 for Petroflex. At May 31,
2003, these market values were US$ 108,936 for Copesul and US$ 10,665 for
Petroflex. No allowance for loss on these investments has been recorded
because, based on projected cash flow analyses and independent valuation
studies, the decline in the value of these investees is believed to be
temporary.
F-62
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
(b)
Derivatives
Since Braskem operates in the international market, where it obtains funding
for its operations and investments, it is exposed to market risks related to
variations of foreign currency exchange rates and international interest rates.
Braskem developed a risk management policy as from December 31, 2001 with the
following objectives: maintain coverage of principal and interest settlements
(consolidated) maturing within 12 months for, at least (i) 60% of Braskem's
total U.S.-dollar indebtedness that is related to exports (trade finance),
excluding Advances on Currency Contracts (ACCs) with a remaining maturity of up
to 6 months and Advances on Export Contracts (ACEs) and (ii) 75% of the total
debt in U.S. dollars unrelated to exports (non-trade finance). Compliance with
this policy varies based upon applicable market conditions, credit availability
and cash balances.
Braskem uses various kinds of currency risk management instruments, some of
them using available cash. The most common transaction using available cash
adopted by Braskem involves foreign currency cash investments (certificates of
deposit, international funds, time deposits and overnight funds) and options.
The most common foreign currency risk management instruments without using
available cash are swap contracts (exchange of U.S. dollar variation for
Interbank Deposit Certificate (CDI) rate) and forwards.
Effective January 1, 2001, the Company adopted SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended. The Company's
contracts did not meet the criteria to qualify as the hedge of an exposure to
foreign currency or interest rate risk. Therefore, the Company has accounted
for the derivative transactions by calculating the unrealized gain or loss at
the balance sheet date and changes in the fair value of all derivatives are now
being recorded in current operations.
Until the adoption of SFAS No. 133, the derivative instruments would be accounted
for as a "no hedging designation" instrument, and any gain or loss thereon
would be recognized currently in earnings at the settlement amount at each
closing date. As a result of adopting SFAS 133 as of January 1, 2001, the
Company recorded a net asset of US$ 1,767 (net of income tax effects of US$
589), reflecting the net fair value on such date of its derivative
financial instruments and the contra-entry is presented as "Cumulative effect of a change
in accounting principle" in the statement of operations for the year ended
December 31, 2001.
F-63
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
On December 31, 2002, Braskem and its direct and indirect subsidiaries had
swap, forward and option contracts for foreign currency and interest, with a
total notional amount of US$ 154,915, falling due between January 2, 2003 and
June 1, 2004. These instruments are intended to reduce the impacts of an
eventual devaluation of the Brazilian real and an increase in international
interest rates on U.S. dollar liabilities.
At December 31, 2002, the fair value of derivative instruments in an asset
position was US$ 391 (2001 — US$ 5,214), and the fair value of derivative
instruments in a liability position was US$ 6,370 (2001 — US$ 12,542). These
amounts are recorded in the balance sheet as other current assets and fair
market value of derivative financial instruments (current liability),
respectively.
17
Major non-cash investing and financing transactions
The following non-cash transactions were excluded from the statement of cash
flows:
(a)
The corporate reorganization transactions involving companies under
common control, as described in Note 1(b).
(b)
The acquisitions of OPP PP and 52114 in exchange for Braskem shares, as
described in Note 1(c-v).
(c)
The distributions by OPP PP included in the statement of changes in
stockholder's equity, which were primarily made through debits to the
intercompany loan accounts involving the Odebrecht Group.
18
Business segments
The Company has four identifiable reportable segments, as more fully described in Note 1(a):
Ø
Basic Petrochemicals
Ø
Polyolefins
Ø
Vinyls
Ø
Business Development
F-64
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
The accounting policies underlying the financial information provided for the
segments are based on accounting principles determined by Brazilian Corporate
Legislation. Management of the Company evaluates segment performance
information generated from the statutory accounting records. Intersegment
transactions are recorded at their statutory amounts.
The local currency information related to the statement of operations data has
been translated to U.S. dollars, for convenience purposes, at the average rate
for each period presented. The information at the balance sheet date has been
translated to U.S. dollars at the respective year-end exchange rates.
Braskem prepared a reconciliation of segment information to its consolidated
financial statements and restated prior period segment information as
practicable.
December 31,
2002
2001
Basic Petrochemicals
757,231
1,859,121
Polyolefins
1,174,213
1,157,998
Vinyls
650,906
927,881
Business Development
94,556
77,170
Other
908,369
342,619
US GAAP adjustments and eliminations
(650,321
)
(661,543
)
Total segment assets
2,934,954
3,703,246
Basic Petrochemicals
717,729
529,611
Polyolefins
114,258
195,819
Vinyls
6,110
10,141
Business Development
563
Other
190,114
12,042
US GAAP adjustments and eliminations
(778,556
)
(343,171
)
Total investments
250,518
404,442
F-65
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
Years ended December 31,
2002
2001
2000
Basic Petrochemicals
1,127,142
1,330,987
1,568,713
Polyolefins
873,748
341,364
Vinyls
403,930
153,864
Business Development
92,506
28,368
US GAAP adjustments and eliminations
(106,210
)
(82,692
)
(13,613
)
Net sales
2,391,116
1,771,891
1,555,100
Basic Petrochemicals
84,348
132,255
218,335
Polyolefins
312,667
52,570
Vinyls
18,739
23,574
Business Development
5,721
3,208
US GAAP adjustments and eliminations
100,688
32,445
7,373
Operating income
522,163
244,052
225,708
Less:
Equity in earnings in affiliates
22,467
(6,090
)
6,889
Minority interest
65,024
(63,848
)
15
Income taxes
(20,422
)
14,332
(2,937
)
Financial income (expenses)
(991,988
)
(214,145
)
(39,131
)
Non-operating income (expense)
(57,281
)
(26,312
)
(2,494
)
Cumulative effect of a change in accounting principle
1,767
Net income (loss)
(460,037
)
(50,244
)
188,050
Basic Petrochemicals
(40,768
)
(44,958
)
(58,050
)
Polyolefins
(14,639
)
(7,757
)
Vinyls
(15,130
)
(4,904
)
Business Development
(460
)
(1,432
)
US GAAP adjustments and eliminations
9,041
4,886
6,454
Total depreciation
(61,956
)
(54,165
)
(51,596
)
F-66
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
Information on the geographical composition of the Company's sales is as
follows:
Years ended December 31,
2002
2001
2000
Domestic
1,854,741
1,573,139
1,387,435
Exports from Brazil
536,375
198,752
167,665
Total net sales
2,391,116
1,771,891
1,555,100
Exports from Brazil (classified by geographic destination)
Years ended December 31,
2002
2001
2000
Americas
313,371
130,834
131,532
Far East
102,196
33,623
Europe
91,160
22,632
34,929
Other
29,648
11,663
1,204
536,375
198,752
167,665
19
Earnings per share
The following table provides a reconciliation of the numerators and
denominators used in computing earnings per share and the allocation of
distributed and undistributed income between common and preferred stockholders
under the two-class method of computing earnings per share as required by SFAS
No. 128.
F-67
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
Weighted average
Per thousand
Net income
number of shares
shares (whole US
(loss)
(thousands)
dollars)
2002
Basic and diluted loss available to common shareholders
(460,037
)
1,198,834
(383.74
)
2001
Basic and diluted loss available to common shareholders
(50,244
)
881,548
(57.00
)
2000
Net income
188,050
Less dividends declared and paid in current period:
Preferred class A
(29,865
)
Preferred class B
(257
)
Total undistributed earnings
157,928
Income allocated to:
Preferred class A
To satisfy 6% minimum dividend requirement
(6,915
)
Pro-rata share of excess
shared with common shareholders
96,239
Preferred class B
To satisfy 6% minimum dividend requirement
(15
)
Basic income available to common shareholders
68,617
646,693
106.10
Effect of conversion of preferred class B
to preferred class A
0.03
Diluted income available to common shareholders
68,617
646,693
106.10
Basic and diluted earnings per share are the same in 2002 and 2001 because the
effects of conversion of convertible debentures (Note 9) would be antidilutive.
No dilutive securities existed in 2000.
F-68
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
20
Restatement of 2001 consolidated financial statements
(a)
As described in Note 1(c-v), the Company's consolidated financial
statements have been retroactively restated to include OPP PP and its
subsidiaries as from July 25, 2001, the date that Braskem and OPP PP came under
common control and to eliminate intercompany transactions for that
period. The following table shows the consolidation of OPP PP into
Braskem for the respective periods presented.
As of December 31, 2001
Braskem -
before
consolidation of
OPP PP (as
Eliminations
restated, see
and
Braskem -
Note 20(b))
OPP PP
reclassifications
restated
Current assets
433,796
517,278
(41,632
)
909,442
Investments
159,868
96,651
147,923
404,442
Goodwill, net
336,406
9,581
(161,100
)
184,887
Property, plant and equipment, net
1,078,429
680,125
1,758,554
Other non-current assets
243,378
241,328
(38,785
)
445,921
Total assets
2,251,877
1,544,963
(93,594
)
3,703,246
Current liabilities
391,695
1,169,607
(41,633
)
1,519,669
Long-term liabilities
943,326
759,976
(38,786
)
1,664,516
Total liabilities
1,335,021
1,929,583
(80,419
)
3,184,185
Minority interest
132,579
200,625
(9,592
)
323,612
Shareholders' equity
784,277
(585,245
)
(3,583
)
195,449
Total liabilities and shareholders' equity
2,251,877
1,544,963
(93,594
)
3,703,246
F-69
Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
For the year ended December 31, 2001
Braskem -
before
OPP PP - Five
consolidation
of
month-period
OPP PP (as
ended
restated,
see
December
Braskem -
Note 20(b))
31,2001
Eliminations
restated
Net sales, net of allowances
1,382,050
457,792
(67,951
)
1,771,891
Cost of sales
(1,186,779
)
(328,379
)
67,951
(1,447,207
)
Gross profit
195,271
129,413
324,684
Operating income
133,485
110,567
244,052
Non-operating income
(162,587
)
(77,870
)
(240,457
)
Income before income tax, equity in results of
affiliates, minority interest and change in
accounting principle
(29,102
)
32,697
3,595
Income tax
14,524
(192
)
14,332
Income before equity in results of affiliates,
minority interest and change in accounting
principle
(14,578
)
32,505
17,927
Equity in results of affiliates
4,358
(6,863
)
(3,585
)
(6,090
)
Minority interest
(1,265
)
(62,583
)
(63,848
)
Income before change in accounting principle
(11,485
)
(36,941
)
(3,585
)
(52,011
)
Cumulative effect of change in accounting
principle, net of income tax effect
1,767
1,767
Loss for the year
(9,718
)
(36,941
)
(3,585
)
(50,244
)
Basic and diluted earnings (losses) per thousand
common shares
(15.03
)
(57.00
)
(b)
After issuing the consolidated financial statements of the Company for the year
ended December 31, 2001, management of the Company determined that the original
accounting for the acquisition of the Northeast Assets (Note 1(c)) in July 2001
did not appropriately reflect the fact that the Odebrecht Group had indirect
control of the Company immediately after the ESAE Auction.
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Table of Contents
Braskem S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000
Expressed in thousands of U.S. dollars, unless otherwise stated
The consolidated financial statements for the year ended December 31, 2001 have
therefore been restated to record the portions of the Northeast Assets that
were purchased by the Company from the Odebrecht Group at their carry over
basis. The excess of the purchase price over the book value of the Northeast
Assets has been reflected as a distribution to the Odebrecht Group. The
effects of the restatement on the consolidated balance sheet and statement of
operations are summarized below:
As originally
reported
As restated
Balance sheet as of December 31, 2001:
Investments in affiliated companies
171,014
159,868
Goodwill, net
486,149
336,406
Property, plant and equipment, net
1,094,486
1,078,429
Long-term
liabilities
945,334
943,326
Shareholders' equity
959,215
784,277
Statement of operations for the year ended December 31, 2001:
Cost of sales
(1,187,592
)
(1,186,779
)
Operating income
132,672
133,485
Income tax benefit
16,077
16,363
Equity in earnings of affiliated companies
4,095
4,358
Loss for the year
(11,080
)
(9,718
)
Basic and diluted loss per common share
(17.13
)
(15.03
)
*
*
*
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