Quartely Release July 28, 2003

April/June 2003

June 30, 2003

Klabin reduces debt

Consolidated net revenue rose 39% to R$ 812 million in 2Q03 despite a sluggish economy in Brazil.

KLBN4 (BOVESPA) / KLBAY (OTC) Preferred shares ('000) 600,856 Preferred share price Book value Free float Daily traded volume R$ 2.95 R$ 2.37 77% R$ 2,116 K

Highlights
Exports totaled US$ 112 million. EBITDA: R$ 297 million, with a 37% margin. Net Debt/EBITDA falls to 1.6x. Net Profit reaches R$ 1,031 million.

Operating cash generation grew 75%, totaling R$ 297 million, with an EBITDA margin of 37%.

The closing of a US$ 610.5 million investment agreement involving Riocell enabled Klabin to move forward in its financial restructuring program. This will, in turn, promote a dramatic cut in financial expenses and strengthen cash generation for the new Development Plan.

Quartely Release July 28, 2003

Initial Considerations
The information presented herewith in connection with the Company's operations and finances consists of consolidated figures stated in local currency as per Brazilian Corporate Law, except where otherwise indicated. This release compares the performance of Klabin S.A. in 2Q03 to the figures for 2Q02, save specifications to the contrary.

Highlights
Change YoY (5%) 39% 57% 88% 75% Change HoH (1%) 47% 71% 130% 88%

R$ Million Sales Volume (1,000 ton) Net Revenue Gross Profit Gross Margin EBIT Net Profit (Loss) EBITDA(*) EBITDA margin (%) Equity Net Debt Total Capitalization Net Debt / EBITDA (annualized) Net Debt / Total Capitalization Depreciation + Amortization Capex
( )

2Q03 421 812 369 45% 170 1,031 297 37% 2,179 2,077 4,352 1.6 x 48% 86 54

2Q02 444 585 234 40% 90 (230) 169 29% 1,066 2,688 3,812 3.8 x 71% 79 60

1Q03 450 868 434 50% 276 63 361 42% 1,148 2,806 4,017 2.4 x 70% 85 45

1H03 871 1,680 802 48% 446 1,094 658 39% 2,179 2,077 4,352 1.6 x 48% 171 100

1H02 884 1,143 470 41% 194 (223) 351 31% 1,066 2,688 3,812 3.8 x 71% 156 104

(23%)

(23%)

9% (10%)

10% (4%)

* Before the expenses related to the investment agreement involving Riocell, totaling R$ 40.5 million in 2Q03

Economic and Financial Performance

Sales Volume and Net Revenue
Klabin's sales showed two different behaviors in the second quarter of 2003. While exports continued to grow, supported by the production of packaging paper and pulp at full capacity, other segments such as corrugated boxes, tissue and multiwall bags, basically geared towards the domestic market, were affected by the sluggish Brazilian economy. Sales volume, excluding wood, totaled 421 thousand tons in 2Q03, down 5% from 2Q02. Net revenue rose 39% to R$ 812 million. The reason for this improvement in revenue is that the higher prices practiced in 1Q03 were maintained in 2Q03. Furthermore, the average exchange rate was superior to that registered in 2Q02, albeit lower than the rate observed in 1Q03.

Quartely Release July 28, 2003

Operating Result
Thanks to productivity gains, tight control over operating costs and higher prices, gross profit grew 57%, totaling R$ 369 million, with a gross margin of 45% against 40% in 2Q02. Operating profits before financial results (EBIT) reached R$ 170 million in 2Q02 (R$ 90 million in 2Q02). Operating margin jumped from 15% to 21%. It should be noted that General & Administrative Expenses include non-recurrent disbursements in the amount of R$ 40.5 million related to the investment agreement involving Riocell.

EBITDA
Cash generation (EBITDA) reached R$ 297 million in 2Q03, up 75% from 2Q02. However, this figure fell 18% when compared to 1Q03 due to a weaker demand in the domestic market. Below is a breakdown of the Company's EBITDA by business line over the period. The packaging segment comprises packaging paper, corrugated boxes and multiwall bags (Brazil).
EBITDA Margin

R$ Million

400 300 200 100 0 262 181 169

41 33 34 29
366

42 37

50% 40% 30%

361

297

20% 10% 0%

1Q02

2Q02

3Q02

4Q02

1Q03

2Q03

EBITDA

EBITDA Margin

(*) Before the expenses related to the investment agreement involving Riocell, totaling R$ 40.5 million in 2Q03

EBITDA per business segment

R$ Million
Packaging Forestry Market Pulp Dissolving Pulp Tissue Brazil Tissue Argentina Sacks Argentina Newsprint Corporate Expenses / Intercompany Consolidated
( )

1Q02 126 33 26 10 3 1 1 1 (20) 181

2Q02 127 36 21 7 (1) 1 2 (1) (22) 169

3Q02 170 40 57 16 5 1 1 0 (27) 262

4Q02 257 46 75 15 5 0 1 0 (34) 366

2002 680 155 179 49 12 3 6 0 (104) 979

1Q03 2Q03 * 249 188 57 74 13 6 1 1 (15) (24) 361

( )

50 62 9 0 1 1 6 (19) 297

* Before the expenses related to the investment agreement involving Riocell, totaling R$ 40.5 million in 2Q03

Quartely Release July 28, 2003

Financial Result and Indebtedness

Net financial expenses totaled R$ 149 million in 2Q03 (R$ 323 million in 2Q02). Net currency variations generated a R$ 33 million gain against a R$ 246 million loss in 2Q02. Gross debt declined from R$ 2,941 million in late 2002 to R$ 2,811 million in June 2003. Forty-five per cent (45%) of this amount refers to long-term debts with terms to maturity extending to 2010. Foreign currency debt represents 34% of Klabin's total indebtedness, 42% of which refers to trade finance. With the anticipated redeem of the debentures issued by Riocell, owned by Klabin, the Company's net debt closed 2Q03 at R$ 2,077 million, down 26% from the end of 2002. Current net debt corresponds to 48% of total capitalization (72% in 2Q02). The net debt/EBITDA ratio improved significantly from 3.8x in 2Q02 to 1.6x in 2Q03.
Debt - Consolidated
R$ million 12/31/2002 Currency Local Foreign 899 1,028 1,927 719 295 1,014 6/30/2003 Currency Local Foreign 807 1,046 1,854 739 218 957

Total 1,618 1,323 2,941 (120) 2,821

Total 1,547 1,264 2,811 (734) 2,077

Short Term Long Term GROSS DEBT Cash and Short Term Investments NET DEBT

The Company's hedge position as at June 30, 2003 was US$ 111 million.

Net Profit
Net Profit amounted to R$ 1,031 million in 2Q03, reflecting non-operating revenues of R$ 1,026 million, mainly related to capital gains due to a change in the stake on investments in Riocell and Norske Skog Klabin.

Quartely Release July 28, 2003

Business Performance
* In this section, Sales volume and Net Revenues are consolidated 100%.

Volume 1H03
Sacks/ Envelopes 6% Corrugated Boxes 21% Printing/ Writing 5% Dissolving Pulp 6% Packaging Paper 38%

Net Revenue 1H03

Sacks/ Envelopes 9% Corrugated Boxes 20% Printing/ Writing 4% Packaging Paper 28% Dissolving Pulp 4%

Market Pulp 15% Tissue 8% Others 1%

Market Pulp 10% Tissue 17%

Wood 6% Others 2%

(*) Sales volume figures do not include wood

(*) Net Revenue consolidated 100% Net revenue does include wood

Packaging Paper Sales volume reached 170 thousand tons in 2Q03, up 26% from 2Q02, while net revenue rose 68% to R$ 261 million. With regard to exports, a noteworthy event was the recovery of the Argentinean market. Sales to this specific market over the period exceeded the levels attained before the economic crisis. As for the domestic market, the positive evolution of packaging cardboard sales despite the unfavorable market conditions in this segment resulted from productivity gains and the development of new applications as a means to secure customer loyalty. Kraftliner production on machine # 6 as of April also helped to improve the performance of packaging paper sales in the second quarter of 2003. Corrugated Boxes Economic activity remained sluggish in Brazil and affected the sale of non-durable consumer goods, which account for 60% of Klabin's output of corrugated boxes. The sales volume of corrugated boxes totaled 89 thousand tons in 2Q03, down 30% from 2Q02. Net revenue amounted to R$ 183 million, up 21% from 2Q02. For strategic purposes, Klabin has sought to preserve the contribution margin of this business line by optimizing selling prices and operating costs. Multiwall Bags Sales volume totaled 28 thousand tons in 2Q03, down 5% from 2Q02. Decreased sales to the domestic market on account of the general slowdown in Brazil's economy were offset by increased exports. Thanks to the prices practiced internationally and to an adjustment to domestic prices at the beginning of the year, net revenue improved 40%, totaling R$ 77 million in 2Q03. Market Pulp Now that the Guaba (RS) mill operating at full capacity, sales volume jumped 29% to 61 thousand tons in 2Q03. Net revenue reached R$ 85 million, up 79% from 2Q02.
5

Quartely Release July 28, 2003

Dissolving Pulp After the annual downtime for maintenance in 1Q03, productivity improved and the plant began to produce 10 thousand tons of dissolving pulp per month. Sales volume amounted to 29 thousand tons, with total output already sold up to July 2004. Financially, favorable external market conditions allowed average prices to rise 39%, resulting in a net revenue of R$ 46 million. Tissue Sales volume amounted to 32 thousand tons, down 18% from 2Q02 due to the loss of purchasing power among Brazilians and the increasing sales of cheaper brands. Thanks to price adjustments and new launches, net revenue advanced 22%, totaling R$ 138 million. Printing & Writing Paper Sales volume amounted to 7 thousand tons in 2Q03, up 18% from 2Q02. Net revenue rose 61% from 2Q02, closing the period at R$ 17 million. Wood Klabin sold 619 thousand tons of pinus and eucalyptus logs to third parties in 2Q03, 7% more than the amount registered in 2Q02. Net revenue improved 35%, totaling R$ 52 million. Sales by market Export volumes grew 24% to 213 thousand tons in 2Q03. Their share in total sales volume expanded from 39% in 2Q02 to 51% in 2Q03. In 1H03, exports totaled 414 thousand tons, and revenue of R$ 690 million.
Sales Volume by Market Net Revenue by Market

48%

40%

37%

32%

52%

60%

63%

68%

1H03 Domestic Market

1H02 Exports

1H03 Domestic Market

1H02 Exports

(*) Sales volume figures do not include wood

(*) Net Revenue consolidated 100% Net revenue does include wood

By conquering new markets and new customers, Klabin increased its export revenues by 62% to R$ 335 million, when compared to 2Q02. Exports generated US$ 112 million in 2Q03, totaling US$ 214 million in the semester.

Capital Expenditures
Capital expenditures totaled R$ 54 million in 2Q03 and R$ 100 million in the first half of the year. Major capital investments included: R$ 27 million in the recycling plant at Correia Pinto (SC), R$ 13 million in the revamping of machine # 6 for the production of packaging paper at Monte Alegre (PR), and R$ 9 million in the pulp plant at Guaba (RS).

Quartely Release July 28, 2003

Capital Markets
Klabin's preferred shares (KLBN4) ended the trading session held on KLBN4 vs.Ibovespa - 12 months Closing Price: 6/28/02 = 100 June 30, 2003 quoted at R$ 2.95. They appreciated 61% in 2Q03 350 Klabin while the So Paulo Stock 300 Exchange Index [Ibovespa] rose 15%. Of all the stocks that 250 integrate the Ibovespa, KLBN4 ranked first in terms of profitability 200 in the first semester of 2003, with 150 accumulated earnings of 186%. In addition to integrating the 100 Ibovespa Ibovespa, Klabin is also classified 50 2 2 2 2 2 2 2 3 3 3 3 3 3 by the So Paulo Stock Exchange /0 /0 /0 /0 /0 /0 /0 /0 /0 /0 /0 /0 /0 07 07 08 09 10 11 12 01 02 03 04 05 06 1/ 0/ 7/ 4/ 2/ 0/ 8/ 1/ 8/ 0/ 7/ 0/ 7/ [Bovespa] as a Level 1 0 3 2 2 2 2 1 2 1 2 1 2 1 corporation in terms of Corporate Governance. There were altogether 8,235 transactions in 2Q03, involving 88.9 million preferred shares and a daily traded volume of R$ 3.6 million.

Investment Agreement - Riocell

On 06/30/03, Aracruz fully subscribed a capital increase in Riocell, in the amount R$ 1,758.7 million or US$ 610.5 million. Subsequently, Riocell redeemed debentures of its own worth R$ 632.6 million, held by Klabin.

Subsequent Event
On 07/02/03, Riocell acquired R$ 1,126.1 million worth of stocks of its own held by Klabin. With the new cash, Klabin paid off financing contracts in the amount of R$ 1,306.3 million. The table below shows the Company's preliminary position in terms of indebtedness after such payments.

R$ million Gross debt Cash and financial investments Net debt Net debt /EBITDA

06/30/03 2,811 734 2,077 1.6 x

07/07/03 1,505 457 1,048 0.8 x

Quartely Release July 28, 2003

For further information, please contact:

Ronald Seckelmann, Diretor Financeiro e de RI Luiz Marciano Candalaft, Gerente de RI Tel: (11) 3225-4045 Email: marciano@klabin.com.br Paulo Roberto Esteves Tel: (11) 3897-6466 Email: paulo.esteves@thomsonir.com.br

With a gross revenue of R$ 3.2 billion in 2002, Klabin stands as the largest integrated pulp & paper mill in Brazil, capable of selling 2 million tons of products per year, and as a leader in most of its business markets. For strategic purposes, the Company will focus on the following business lines: packaging paper, cardboard products, corrugated boxes, multiwall bags, tissue and wood.

The statements contained herein with regard to the Company's business prospects, operating and financial result projections, and references to its potential growth are merely forecasts based on the expectations of Company Management in relation to its future performance. Such estimates are highly dependent on market behavior and on Brazilian economic, industry and international market conditions. They are therefore subject to change.

Attachment 1 Consolidated Income Statement Brazilian Corporate Law (Thousand of R$)

2Q03
Net Revenue Cost of Products Sold Gross Profit Selling Expenses General & Administrative Expenses Other Revenues (Expenses) Total Operating Expenses Operating Profit (before Fin. Results) Equity in net profit (loss) of subsidiaries Financial Expenses Net Foreign Exchange Losses Financial Revenues Net Financial Expenses Operating Profit Non Operating Revenues (Expenses) Net Profit (Loss) before Taxes Income Tax and Soc. Contrib. Minority Interest Net Profit (Loss) Amortization Depreciation EBITDA *
( )

2Q02
585,098 (350,644) 234,454 (87,345) (40,993) (15,713) (144,051) 90,403 730 (85,758) (246,065) 9,116 (322,707) (231,574) (37) (231,611) 1,541 (260) (230,330) 58,883 20,109 169,395

1Q03
868,479 (434,818) 433,661 (113,981) (35,907) (7,617) (157,505) 276,156 (67) (171,505) (16,127) 11,843 (175,789) 100,300 1,268 101,568 (37,520) (840) 63,208 65,362 19,653 361,171

Change YoY
38.8% 26.4% 57.3% 12.7% 115.8%

Change QoQ
(6.5%) 1.9% (15.0%) (13.6%) 146.4%

% of Net Revenue 2Q03 2Q02 1Q03

100.0 54.6 45.4 12.1 10.9 1.5 24.5 100.0 59.9 40.1 14.9 7.0 2.7 24.6 15.5 0.1 14.7 42.1 1.6 55.2 39.6 0.0 39.6 0.3 0.0 39.4 10.1 3.4 29.0 100.0 50.1 49.9 13.1 4.1 0.9 18.1 31.8 0.0 19.7 1.9 1.4 20.2 11.5 0.1 11.7 4.3 0.1 7.3 7.5 2.3 41.6

811,989 (443,204) 368,785 (98,472) (88,474) (11,849) (198,795) 169,990 27 (187,913) 32,607 6,384 (148,922) 21,095 1,026,273 1,047,368 (14,993) (1,121) 1,031,254 67,234 19,208 296,932

88.0% (96.3%) 119.1% (30.0%) (53.9%)

(38.4%) 9.6% (46.1%) (15.3%)

20.9 0.0 23.1 4.0 0.8 18.3 2.6 126.4 129.0 1.8 0.1 127.0

14.2% (4.5%) 75.3%

2.9% (2.3%) (17.8%)

8.3 2.4 36.6

( )

* Before the expenses related to the investment agreement involving Riocell, totaling R$ 40.5 million in 2Q03

Attachment 2 Consolidated Income Statement Brazilian Corporate Law (Thousand of R$)

1H03
Net Revenue Cost of Products Sold Gross Profit Selling Expenses General & Administrative Expenses Other Revenues (Expenses) Total Operating Expenses Operating Profit (before Fin. Results) Equity in net profit (loss) of subsidiaries Financial Expenses Net Foreign Exchange Losses Financial Revenues Net Financial Expenses Operating Profit Non Operating Revenues (Expenses) Net Profit (Loss) before Taxes Income Tax and Soc. Contrib. Minority Interest Net Profit (Loss) Amortization Depreciation EBITDA *
( )

1H02
1,143,117 (673,585) 469,532 (164,751) (81,126) (29,256) (275,133) 194,399 905 (164,027) (265,993) 15,963 (414,057) (218,753) (3,935) (222,688) 479 (483) (222,692) 116,462 39,952 350,813

Change
47.0% 30.4% 70.9% 29.0% 53.3%

% of Net Revenue 1H03 1H02

100.0 52.2 47.8 12.6 7.4 1.2 21.2 100.0 58.9 41.1 14.4 7.1 2.6 24.1 17.0 0.1 14.3 23.3 1.4 36.2 19.1 0.3 19.5 0.0 0.0 19.5 10.2 3.5 30.7

1,680,468 (878,022) 802,446 (212,453) (124,381) (19,466) (356,300) 446,146 (40) (359,418) 16,480 18,227 (324,711) 121,395 1,027,541 1,148,936 (52,513) (1,961) 1,094,462 132,596 38,861 658,103

129.5% 119.1% 14.2% (21.6%)

26.5 0.0 21.4 1.0 1.1 19.3 7.2 61.1 68.4 3.1 0.1 65.1

13.9% (2.7%) 87.6%

7.9 2.3 39.2

( )

* Before the expenses related to the investment agreement involving Riocell, totaling R$ 40.5 million in 2Q03

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Attachment 3 Consolidated Balance Sheet Brazilian Corporate Law (Thousand of R$)

Assets
Current Assets Cash and banks Short-term investments Receivables Inventories Recoverable taxes and contributions Other receivables 6/30/2003 1,761,920 679,262 54,689 558,879 281,883 137,228 49,979 12/31/2002 1,021,844 60,952 58,871 473,035 291,805 90,016 47,165

Liabilities and Stockholders' Equity

Current Liabilities Loans and financing Debentures Suppliers Income tax and social contribution Taxes payable Payroll provisions Other accounts payable Long-Term Liabilities Loans and financing Debentures Other accounts payable Results for Future Fiscal Years Minority Interests Stockholders' Equity Capital Capital reserves Revaluation reserve Profit reserve Treasury stock Total

6/30/2003 2,043,049 1,064,740 482,208 242,788 61,758 23,658 52,598 115,299 1,530,729 699,849 564,000 266,880

12/31/2002 2,031,405 1,135,431 482,705 231,842 3,788 32,510 56,133 88,996 1,566,618 758,566 564,000 244,052 2,605 61,733 1,083,566 800,000 193,632 93,799

Long-Term Receivables Deferred income tax and soc. contrib. Taxes to compensate Recoverable taxes Other receivables Permanent Assets Other investments Property, plant & equipment, net Deferred charges

501,851 293,878 11,339 141,213 55,421 3,585,030 1,211,877 2,182,384 190,769

480,342 281,457 25,151 120,254 53,480 3,243,741 70,225 2,921,101 252,415

Total

5,848,801

4,745,927

95,634 2,179,389 800,000 195,351 92,709 1,095,194 (3,865) (3,865) 5,848,801 4,745,927

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Attachment 4 Domestic Market (Consolidated 100%)

2Q03 Sales Volume (1,000 ton) Newsprint Printing and Writing Paper Packaging Paper Tissue Market Pulp Dissolving Pulp Corrugated Boxes Sacks/Envelopes Others Wood Volume (1,000 ton) Net Revenue (R$ million) Newsprint Printing and Writing Paper Packaging Paper Tissue Market Pulp Dissolving Pulp Corrugated Boxes Sacks/Envelopes Others Wood 208 6 64 22 1 0 87 21 6 619 543 0 15 124 99 2 1 179 57 16 52 2Q02 272 26 5 53 28 3 0 126 25 5 532 439 28 8 74 88 1 0 148 47 12 33 1Q03 250 33 5 62 26 2 0 93 22 6 655 610 45 13 111 117 2 0 189 61 16 55 22.4% 21.4% (22.2%) (46.9%) 30.1% (30.9%) (18.6%) 31.5% 16.4% 23.5% (100.0%) 72.9% 67.7% 11.6% 98.9% 43.9% 21.0% 23.4% 27.7% 55.5% 14.0% 3.8% (16.5%) (30.8%) 40.6% (6.3%) (5.1%) (2.5%) (5.4%) (11.0%) (100.0%) 15.6% 11.5% (16.1%) 4.0% 33.5% (5.2%) (6.4%) (3.5%) (6.1%) Change YoY (23.5%) Change QoQ (16.8%)

12

Attachment 5 Exports (Consolidated 100%)

2Q03 Sales Volume (1,000 ton) Newsprint Printing and Writing Paper Packaging Paper Tissue Market Pulp Dissolving Pulp Corrugated Boxes Sacks/Envelopes Others Wood Volume (1,000 ton) Net Revenue (R$ million) Newsprint Printing and Writing Paper Packaging Paper Tissue Market Pulp Dissolving Pulp Corrugated Boxes Sacks/Envelopes Others Wood 335 2 138 40 83 45 4 19 3 0 213 1 106 10 59 28 2 7 0 2Q02 172 1 82 11 45 28 2 4 0 49 207 2 82 25 47 33 3 8 1 5 355 3 144 51 98 34 4 19 2 0 10.6% 67.3% 57.9% 78.5% 38.6% 23.1% 131.2% 135.7% (33.0%) (4.2%) (21.2%) (15.0%) 32.5% (4.5%) 2.3% 54.8% 61.9% (5.7%) 1Q03 201 1 96 13 64 20 1 6 0 (1.2%) 28.5% (4.6%) 33.2% 0.1% 10.5% 83.1% (19.9%) 10.1% (20.1%) (7.1%) 44.1% 15.4% 20.2% Change YoY 24.1% Change QoQ 6.3%

13

Attachment 6 Total Sales (Consolidated 100%)

2Q03 Sales Volume (1,000 ton) Newsprint Printing and Writing Paper Packaging Paper Tissue Market Pulp Dissolving Pulp Corrugated Boxes Sacks/Envelopes Others Wood Volume (1,000 ton) Net Revenue (R$ million) Newsprint Printing and Writing Paper Packaging Paper Tissue Market Pulp Dissolving Pulp Corrugated Boxes Sacks/Envelopes Others Wood 421 0 7 170 32 61 29 89 28 7 619 878 0 17 261 138 85 46 183 77 19 52 2Q02 444 26 6 135 39 47 29 128 29 5 581 646 28 10 156 114 48 33 151 55 14 38 1Q03 450 33 6 158 39 66 20 94 28 7 655 965 45 16 255 168 100 35 193 80 18 55 61.4% 67.5% 21.9% 78.9% 38.7% 21.1% 39.6% 37.4% 35.3% (5.5%) (2.5%) 21.4% 17.2% (24.6%) 5.5% 4.6% (2.4%) 6.5% 18.1% 25.7% (17.5%) 28.6% 0.4% (30.4%) (5.2%) 36.8% 6.7% 35.8% 7.1% 7.6% (17.7%) (7.9%) 44.0% (6.0%) 0.3% 0.9% (5.4%) 10.0% Change YoY (5.1%) Change QoQ (6.5%)

14

Attachment 7
Financing Repayment Schedule 06/30/03
Total Debt - Average Tenor: 14 months Currency R$ Million TOTAL Local Foreign 3Q03 199 471 670 4Q03 531 72 602 1Q04 46 68 114 2Q04 32 128 160 2H04 162 147 309 2005 678 46 725 2006 onwards 206 25 230 TOTAL 1,854 957 2,811 Local Currency Average Tenor: 19 months Average Cost 27.0% per year R$ Million 3Q03 4Q03 1Q04 2Q04 2H04 2005 2006 onwards TOTAL BNDES Debentures Others TOTAL

41 33 32 32 60 113 204 515

10 472 564 1,046

148 25 14 0 102 2 2 293

199 531 46 32 162 678 206 1,854

Foreign Currency Average Tenor: 6 months Average Cost 6.7% per year Trade US$ Million Eurobonds Others TOTAL Finance 3Q03 21 1 142 164 4Q03 20 5 25 1Q04 22 2 24 2Q04 42 3 45 2H04 24 23 4 51 2005 9 7 16 2006 onwards 9 9 TOTAL 139 24 171 333

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Attachment 8
Consolidated Cash Flow Statement
period ended 06/30/03
Operating Activities Net profit for the period Expenses (revenues) not affecting cash and equivalents: Depreciation, amortization and depletion Amortization of non operating goodwill Amortization of goodwill Gain (Loss) on sale of property, plant and equipment Impaiment for losses on fixed assets Gain (Loss) of Capital Deferred income tax and social contribution Income tax and social contribution charges Interest and exchange rate variations on loans and financings Equity in losses of subsidiaries Exchange rate variations on investments abroad Minority Interest Redution (increase) in Assets Cash and cash equivalents Accounts receivable Inventories Taxes recoverable Prepaid Expenses Judicial Deposits Others accounts receivable Increase (reduction) in Liabilities Suppliers Taxes payable Provision for income tax and social contribution Salaries, vacation pay and payroll charges Provision for contingencies Deferred income Others accounts payable Deconsolidation of subsidiaries companies Net cash provided from operating activities Investing activities Acquisitions of property, plant and equipment Increase in deferred assets Proceeds from disposals of property, plant and equipment Loans to related parties Capital Integralization Other investments, net Deconsolidation of subsidiaries companies Capital Increase with assets Net cash used on investing activities Financing activities: New funding Loan amortization Interest paid Net cash used in financing activities Net increase in cash and equivalents Cash and cash equivalent at beggining of period Cash and cash equivalent at end of period Thousand of Reais 1,094,462 168,486 21,656 2,971 (1,128) (112) (1,046,296) (17,533) 70,046 161,167 39 51,399 1,975 (9,607) (63,602) (70,019) (47,778) 12,536 (7,156) (122,658) (39,377) (8,022) (3,765) 1,317 1,130 (2,365) 46,467 201,055 395,288 (90,955) (784) 1,829 7,033 (3,487) 97 637,027 108 550,868 664,548 (740,133) (266,050) (341,635) 604,521 75,428 679,949 604,521

16