Form 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Report Of Foreign Private Issuer
Pursuant To Rule 13a-16 Or 15d-16 Of
The Securities Exchange Act Of 1934

For the month of November, 2006

Commission File Number: 001-14950

ULTRAPAR HOLDINGS INC.
(Translation of Registrant’s Name into English) 

 
Avenida Brigadeiro Luis Antonio, 1343, 9º Andar
São Paulo, SP, Brazil
01317-910

(Address of Principal Executive Offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F   X     Form 40-F        

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

         Yes           No   X  

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

         Yes           No   X  

Indicate by check mark whether by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

         Yes           No   X  

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A






ULTRAPAR HOLDINGS INC.

TABLE OF CONTENTS

 

ITEM  

1. 3Q06 Financials, November 8, 2006
2. Minutes of a meeting of the Board of Directors, November 8, 2006








   
   
  Item 1
   
   
   
  (Convenience Translation into English from
  the Original Previously Issued in Portuguese)
   
   
   
  Ultrapar Participações S.A.
   
  Interim Financial Statements for the Quarter
  and Nine-month Period ended September
  30, 2006 and Independent Accountants’
  Review Report
   
   
   
   
  Deloitte Touche Tohmatsu Auditores Independentes






(Convenience Translation into English from the Original Previously Issued in Portuguese)

INDEPENDENT ACCOUNTANTS’ REVIEW REPORT

To the Shareholders and Management of
Ultrapar Participações S.A.

São Paulo - SP

1. We have performed a special review of the accompanying interim financial statements of Ultrapar Participações S.A. and subsidiaries as of and for the quarter and nine-month period ended September 30, 2006, prepared in accordance with Brazilian accounting practices and under the responsibility of the Company’s management, consisting of the balance sheets (Company and consolidated), the related statements of income and the performance report.

2. We conducted our review in accordance with specific standards established by the Brazilian Institute of Independent Auditors (IBRACON), together with the Federal Accounting Council, which consisted principally of: (a) inquiries of and discussions with persons responsible for the accounting, financial and operating areas as to the criteria adopted in preparing the interim financial statements, and (b) review of the information and subsequent events that had or might have had material effects on the financial position and results of operations of the Company and its subsidiaries.

3. Based on our special review, we are not aware of any material modifications that should be made to the financial statements referred to in paragraph 1 for them to be in conformity with Brazilian accounting practices and standards established by the Brazilian Securities Commission (CVM), specifically applicable to the preparation of mandatory interim financial statements.

4. Additionally, we have reviewed the consolidated statements of cash flows, included in Note 23 to the interim financial statements, for the nine-month periods ended September 30, 2006 and 2005, which are presented for purposes of additional analysis and are not a required part of the basic interim financial statements. Such statements have been subjected to the review procedures described in paragraph 2 and, based on our review, we are not aware of any material modifications that should be made to these statements for them to be fairly stated, in all material respects, in relation to the interim financial statements taken as a whole.






Deloitte Touche Tohmatsu

5. We had previously reviewed the Company and consolidated balance sheets as of June 30, 2006 and the Company and consolidated statements of income for the quarter and nine--month period ended September 30, 2005, presented for comparative purposes, and issued unqualified special review reports thereon, dated July 28, 2006 and October 28, 2005, respectively.

6. The accompanying interim financial statements have been translated into English for the convenience of readers outside Brazil.

São Paulo, October 27, 2006

DELOITTE TOUCHE TOHMATSU Altair Tadeu Rossato
Auditores Independentes Engagement Partner

2






(Convenience Translation into English from the Original Previously Issued in Portuguese)
 
ULTRAPAR PARTICIPAÇÕES S.A. AND SUBSIDIARIES
 
BALANCE SHEETS AS OF SEPTEMBER 30, 2006 AND JUNE 30, 2006
(In thousands of Brazilian reais - R$)


    Company   Consolidated       Company   Consolidated  



 
 
ASSETS   09/30/06   06/30/06   09/30/06   06/30/06   LIABILITIES AND STOCKHOLDERS' EQUITY   09/30/06   06/30/06   09/30/06   06/30/06  







 
 
 
 
                                       
CURRENT ASSETS                   CURRENT LIABILITIES                  
Cash and banks   272   153   31,691   47,256   Loans and financing   -   -   120,927   120,263  
Temporary cash investments   295,529   378,986   1,029,598   1,064,124   Debentures   3,075   15,346   3,075   15,346  
Trade accounts receivable   -   -   390,796   355,644   Trade accounts payable   126   324   81,149   90,036  
Inventories   -   -   168,327   197,250   Payroll and related charges   45   45   79,304   66,901  
Recoverable taxes   15,363   16,825   102,802   90,491   Taxes payable   61   7   20,719   16,029  
Deferred income and social contribution taxes   37   42   25,890   22,255   Dividends payable   22,886   13,355   25,941   16,364  
Dividends receivable   -   12,232   -   -   Income and social contribution taxes   -   -   1,336   5,431  
Other   21   23   9,002   8,668   Deferred income and social contribution taxes   -   -   191   210  
Prepaid expenses   560   536   5,731   8,540   Other   3   4   3,250   3,402  





 
 
 
 
Total current assets   311,782   408,797   1,763,837   1,794,228   Total current liabilities   26,196   29,081   335,892   333,982  





 
 
 
 
                                       
LONG-TERM ASSETS                   LONG-TERM LIABILITIES                  
Cash investments   -   -   540,880   522,376   Loans and financing   -   -   1,036,089   1,036,059  
Related companies   38,394   20,409   5,671   5,273   Debentures   300,000   300,000   300,000   300,000  
Deferred income and social contribution taxes   3,036   2,976   73,773   72,540   Related companies   447,061   447,061   5,031   5,060  
Recoverable taxes   9,475   5,603   47,756   42,413   Deferred income and social contribution taxes   -   -   25,020   24,746  
Escrow deposits   -   -   16,173   16,053   Other taxes   9,237   9,063   40,086   42,092  
Trade accounts receivable   -   -   19,389   21,278   Other   -   -   2,114   2,114  
Prepaid expenses   -   -   13,247   13,790  
 
 
 
 
Total long-term liabilities   756,298   756,124   1,408,340   1,410,071  
Other   520   728   1,350   239  
 
 
 
 




                   
Total long-term assets   51,425   29,716   718,239   693,962   MINORITY INTEREST   -   -   33,199   31,884  





 
 
 
 
PERMANENT ASSETS                                      
Investments:                   STOCKHOLDERS' EQUITY                  
 Subsidiary and affiliated companies   2,381,371   2,293,225   4,876   4,828   Capital   946,034   946,034   946,034   946,034  
 Other   186   186   26,119   28,169   Capital reserve   2,046   2,046   483   431  
Property, plant and equipment   -   -   1,113,808   1,089,193   Revaluation reserve   13,533   14,186   13,533   14,186  
Deferred charges   -   -   107,830   107,122   Profit reserves   837,502   837,502   837,502   837,502  




Treasury shares   (6,018 ) (4,894 ) (9,447 ) (8,433 )
Total permanent assets   2,381,557   2,293,411   1,252,633   1,229,312   Retained earnings   169,173   151,845   169,173   151,845  

 
 
 
 
                    Total stockholders' equity   1,962,270   1,946,719   1,957,278   1,941,565  

 
 
 
 
                    Total minority interest and stockholders' equity   1,962,270   1,946,719   1,990,477   1,973,449  





 
 
 
 
                    TOTAL LIABILITIES AND STOCKHOLDERS'                  
TOTAL ASSETS   2,744,764   2,731,924   3,734,709   3,717,502       EQUITY   2,744,764   2,731,924   3,734,709   3,717,502  





 
 
 
 

The accompanying notes are integral part of these financial statements.

3






(Convenience Translation into English from the Original Previously Issued in Portuguese)
 
ULTRAPAR PARTICIPAÇÕES S.A. AND SUBSIDIARIES
 
STATEMENTS OF INCOME
FOR THE QUARTERS ENDED SEPTEMBER 30, 2006 AND 2005
(In thousands of Brazilian reais - R$, except for earnings per share)


    Company     Consolidated  
   









    09/30/06     09/30/05     09/30/06     09/30/05  
   







GROSS SALES AND SERVICES   -     -     1,415,025     1,346,039  
Deductions   -     -     (119,831 )   (116,789 )
 







                         
NET SALES AND SERVICES   -     -     1,295,194     1,229,250  
Cost of sales and services   -     -     (1,029,861 )   (1,009,656 )








                         
GROSS PROFIT   -     -     265,333     219,594  
                         
EQUITY IN SUBSIDIARIES AND AFFILIATED COMPANIES   88,301     66,207     49     21  
                         
OPERATING (EXPENSES) INCOME   71     (14 )   (153,391 )   (140,453 )








Selling   -     -     (51,303 )   (48,455 )
General and administrative   70     (14 )   (70,562 )   (59,488 )
Management compensation   -     -     (1,459 )   (1,423 )
Depreciation and amortization   -     -     (30,785 )   (31,671 )
Other operating income, net   1     -     718     584  








                         
INCOME FROM OPERATIONS BEFORE FINANCIAL ITEMS   88,372     66,193     111,991     79,162  
Financial income (expenses), net   722     1,582     (2,944 )   (2,751 )








Financial income   12,400     16,199     43,444     31,496  
Financial expenses   (11,678 )   (14,617 )   (46,388 )   (34,247 )








                         
INCOME FROM OPERATIONS   89,094     67,775     109,047     76,411  
Nonoperating (expenses) income, net   -     -     (7,677 )   (718 )








                         
INCOME BEFORE TAXES ON INCOME AND                        
   MINORITY INTEREST   89,094     67,775     101,370     75,693  








                         
INCOME AND SOCIAL CONTRIBUTION TAXES   (264 )   (515 )   (11,185 )   (7,426 )








Current   (318 )   (316 )   (35,506 )   (35,842 )
Benefit of tax holidays - ADENE   54     (199 )   15,352     15,343  
Deferred   -     -     8,969     13,073  








                         
INCOME BEFORE MINORITY INTEREST   88,830     67,260     90,185     68,267  
Minority interest   -     -     (1,355 )   (1,007 )








                         
NET INCOME   88,830     67,260     88,830     67,260  








                         
EARNINGS PER SHARE - R$   1.09525     0.82927     1.09525     0.82927  









The accompanying notes are integral part of these financial statements.

4






(Convenience Translation into English from the Original Previously Issued in Portuguese)
 
ULTRAPAR PARTICIPAÇÕES S.A. AND SUBSIDIARIES
 
STATEMENTS OF INCOME
FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2006 AND 2005
(In thousands of Brazilian reais - R$, except for earnings per share)


    Company     Consolidated  
   









    09/30/06     09/30/05     09/30/06     09/30/05  
   







                         
GROSS SALES AND SERVICES   -     -     3,914,718     3,922,425  
Deductions   -     -     (324,445 )   (354,136 )








                         
NET SALES AND SERVICES   -     -     3,590,273     3,568,289  
Cost of sales and services   -     -     (2,889,278 )   (2,838,905 )








                         
GROSS PROFIT   -     -     700,995     729,384  
                         
EQUITY IN SUBSIDIARIES AND AFFILIATED COMPANIES   242,171     257,260     696     1,395  
                         
OPERATING (EXPENSES) INCOME   (335 )   (235 )   (439,996 )   (408,874 )








Selling   -           (144,859 )   (138,560 )
General and administrative   (335 )   (236 )   (200,901 )   (172,637 )
Management compensation   -     -     (4,105 )   (4,374 )
Depreciation and amortization   -     -     (91,925 )   (94,341 )
Other operating income, net   -     1     1,794     1,038  








                         
INCOME FROM OPERATIONS BEFORE FINANCIAL ITEMS   241,836     257,025     261,695     321,905  
Financial income (expenses), net   4,528     633     31,952     (28,224 )








Financial income   40,680     31,131     117,261     71,371  
Financial expenses   (36,152 )   (30,498 )   (85,309 )   (99,595 )








                         
INCOME FROM OPERATIONS   246,364     257,658     293,647     293,681  
Nonoperating (expenses) income, net   -     -     (20,911 )   (3,224 )








                         
INCOME BEFORE TAXES ON INCOME AND                        
  MINORITY INTEREST   246,364     257,658     272,736     290,457  








                         
INCOME AND SOCIAL CONTRIBUTION TAXES   (6,332 )   (116 )   (35,370 )   (30,495 )








Current   (6,468 )   (374 )   (101,692 )   (104,425 )
Benefit of tax holidays - ADENE   136     258     46,105     54,701  
Deferred   -     -     20,217     19,229  








                         
INCOME BEFORE MINORITY INTEREST   240,032     257,542     237,366     259,962  
Minority interest   -     -     (3,643 )   (2,420 )








                         
NET INCOME   240,032     257,542     233,723     257,542  








                         
EARNINGS PER SHARE - R$   2.95952     3.17534     2.88173     3.17534  









The accompanying notes are integral part of these financial statements.

5






(Convenience Translation into English from the Original Previously Issued in Portuguese)

ULTRAPAR PARTICIPAÇÕES S.A.


IDENTIFICATION




01.01 - CAPITAL COMPOSITION
Number of shares
(Thousands)
Current quarter
09/30/2006
Prior quarter
06/30/2006
Same quarter in prior year
09/30/2005
Paid-up Capital      
1 - Common 49,430 49,430 49,430
2 - Preferred 31,895 31,895 31,895
3 - Total 81,325 81,325 81,325
Treasury Stock
4 - Common 7 7 7
5 - Preferred 213 182 211
6 - Total 220 189 218

01.02 - DIVIDENDS APPROVED AND/OR PAID DURING AND AFTER THE QUARTER
1 - ITEM 2 - EVENT 3 - APPROVAL 4 - REVENUE 5 - BEGINNING OF
PAYMENT
7 - TYPE
OF SHARE
8 - AMOUNT
PER SHARE
01
02
Board of Director’s Meeting
Board of Director’s Meeting
08/02/2006
08/02/2006
Dividends
Dividends
08/17/2006
08/17/2006
Common
Preferred
0.8873980000
0.8873980000


01.03 - SUBSCRIBED CAPITAL AND ALTERATIONS IN THE CURRENT YEAR
1 - ITEM 2 - DATE OF
ALTERATION
3 - AMOUNT OF THE
CAPITAL
(IN THOUSANDS OF REAIS)
4 - AMOUNT OF THE
ALTERATION
(IN THOUSANDS OF REAIS)
5 - NATURE OF
ALTERATION
7 - NUMBER
OF SHARES
ISSUED
(THOUSAND)
8 - SHARE
PRICE ON
ISSUE DATE
(IN REAIS)
             

6






(Convenience Translation into English from the Original Previously Issued in Portuguese)
 
ULTRAPAR PARTICIPAÇÕES S.A. AND SUBSIDIARIES
 
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE QUARTER AND NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2006
(In thousands of Brazilian reais - R$, unless otherwise stated)


1. OPERATIONS

Ultrapar Participações S.A. (the “Company”) invests in commercial and industrial activities, including subscription or purchase of shares of other companies with similar activities.

Through its subsidiaries, the Company is engaged in the distribution of liquefied petroleum gas - LPG (Ultragaz), production and sale of chemicals (Oxiteno) and logistic services for chemicals and fuels (Ultracargo).

2. PRESENTATION OF INTERIM FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING PRACTICES

The accounting practices adopted to record transactions and prepare the interim financial statements - ITR are those established by Brazilian accounting practices and the Brazilian Securities Commission (CVM).

a)      Results of operations
   
  Determined on the accrual basis of accounting. Revenues from sales and respective costs are recognized when the products are delivered to the customers or services are performed, and the transfer of risks, rights and obligations associated with the ownership of products takes place.
   
b)      Current and long-term assets
   
  Temporary cash and long-term investments are stated at cost, plus accrued income (on a “pro rata temporis” basis), which approximate to the market value. Temporary cash investments include the results from hedge transactions, as described in Notes 4 and 19, that management intends to hold to maturity.
   
  The allowance for doubtful accounts is based on estimated losses and is considered by management to be sufficient to cover potential losses on accounts receivable.
   
  Inventories are stated at the lower of average cost of acquisition or production, market or net realizable value.
   
  Other assets are stated at the lower of cost or probable realizable values, including, when applicable, accrued income and monetary variations or net of allowances for potential losses.

7






Ultrapar Participações S.A. and Subsidiaries

c)      Permanent assets
   
 
  • Investments

    Significant investments in subsidiaries and affiliated companies are recorded underthe equity method, as shown in Note 10.

    Other investments are stated at acquisition cost, less an allowance for losses, shouldthe loss not be considered temporary.

  • Property, plant and equipment

    Stated at cost of acquisition, process or construction, and include revaluation write-ups, recorded in prior years, based on appraisal reports issued by independentappraisers, in accordance with item 68, letter b), of CVM Resolution No. 183/95.

    Depreciation is calculated on a straight-line basis at the annual rates described inNote 11, based on the economic useful lives of the assets.

  • Deferred charges

    Deferred charges comprise costs incurred in the installation of equipment atcustomers’ facilities, projects to modernize systems, and goodwill on acquisition ofsubsidiaries, as mentioned in Note 12.
   
d)      Current and long-term liabilities
   
  Stated at known or estimated amounts including, when applicable, accrued charges, and monetary and exchange variations incurred during the period.
   
e)      Income and social contribution taxes
   
  Income and social contribution taxes, current and deferred (according to CVM Resolution No. 273/98) are measured on the basis of effective rates and include the benefit of tax holidays.
   
f)      Basis for translation of the financial statements of foreign subsidiaries
   
  The financial statements of foreign subsidiaries are translated into Brazilian reais at the exchange rate in effect as of the date of the interim financial statements - ITR. The criteria for preparation of the financial statements have been adapted to conform to Brazilian accounting practices.
   
g)      Statements of cash flows
   
  The Company is presenting the statements of cash flows as supplementary information, prepared in accordance with Accounting Standard and Procedure (NPC) No. 20 issued by IBRACON (Brazilian Institute of Independent Auditors).

8






Ultrapar Participações S.A. and Subsidiaries

3. CONSOLIDATION PRINCIPLES

The consolidated financial statements have been prepared in accordance with the basic consolidation principles established by Brazilian corporate law and the Brazilian Securities Commission (CVM), and include the following direct and indirect subsidiaries:

                 Ownership interest - %
   
    09/30/2006   06/30/2006






    Direct   Indirect   Direct   Indirect
   
 
 
 
                 
Ultragaz Participações Ltda.   100   -   100   -
   Companhia Ultragaz S.A.   -   99   -   99
   SPGás Distribuidora de Gás Ltda.   -   99   -   99
   Bahiana Distribuidora de Gás Ltda.   -   100   -   100
   Utingás Armazenadora S.A.   -   56   -   56
   LPG International Inc.   -   100   -   100
Ultracargo - Operações Logísticas e                
   Participações Ltda.   100   -   100   -
   Melamina Ultra S.A. Indústria Química   -   99   -   99
   Transultra - Armazenamento e Transporte                
       Especializado Ltda.   -   100   -   100
   Terminal Químico de Aratu S.A. - Tequimar   -   99   -   99
Oxiteno S.A. - Indústria e Comércio   100   -   100   -
   Oxiteno Nordeste S.A. - Indústria e Comércio   -   99   -   99
   Oxiteno Argentina Sociedad de Responsabilidad                
       Ltda.   -   100   -   -
   Oleoquímica Indústria e Comércio de Produtos                
       Químicos Ltda.   -   100   -   100
   Barrington S.L.   -   100   -   100
     Canamex Químicos S.A. de C.V.   -   100   -   100
           Canamex Servicios Corporativos S.A. de C.V.   -   100   -   100
           Canamex Servicios Industriales S.A. de C.V.   -   100   -   100
     Oxiteno International Corp.   -   100   -   100
           Oxiteno Overseas Corp.   -   100   -   100
Imaven Imóveis e Agropecuária Ltda.   100   -   100   -

Upon consolidation, intercompany investments, accounts, transactions and profits were eliminated. Minority interest in subsidiaries is presented separately in the financial statements.

9






Ultrapar Participações S.A. and Subsidiaries

4. TEMPORARY CASH AND LONG-TERM INVESTMENTS

These investments, contracted with leading banks, are substantially composed of: (i) public securities and private securities issued by leading banks, notes issued by the Austrian Government, and fixed-income funds, all linked to the interbank deposit rate (CDI); (ii) abroad, in fixed-income funds, certificates of deposit and corporate securities; and (iii) currency hedges. They are stated at cost plus accrued income on a “pro rata temporis” basis.

    Company   Consolidated  


 
    09/30/2006   06/30/2006   09/30/2006   06/30/2006  
   
 
 
 
 
                   
Austrian notes, indexed in                  
   Brazilian reais   -   -   377,144   366,546  
Securities and fixed-income funds   295,529   378,986   440,161   479,713  
Foreign investments (a) (c)   -   -   803,649   787,734  
Net expenses on hedge transactions (b)   -   -   (50,476 ) (47,493 )
   
 
 
 
 
Total   295,529   378,986   1,570,478   1,586,500  
   
 
 
 
 
                   
Current portion   295,529   378,986   1,029,598   1,064,124  
Long-term portion   -   -   540,880   522,376  
   
 
 
 
 

(a)      Investments made by the indirect subsidiaries Oxiteno Overseas Corp., Oxiteno International Corp. and Canamex Químicos S.A. de C.V. in fixed-income funds, certificates of deposit, Brazilian corporate securities, and low risk investment grade corporate securities.
   
(b)      Accumulated gain or loss on hedge positions (see Note 19).
   
(c)      In April 2006, subsidiary Oxiteno Overseas Corp., owner of notes in the amount of US$60 million issued by Companhia Ultragaz S.A. in the international market in 1997 (Original Notes), sold these Original Notes to a foreign financial institution. Concurrently, subsidiary Oxiteno Overseas Corp. acquired from this financial institution a credit linked note backed by the Original Notes. This transaction provides a financial gain for the Company, corresponding to the difference between the interest rate paid for the credit linked note and the Original Notes, as mentioned in Note 13.b).

10






Ultrapar Participações S.A. and Subsidiaries

5. TRADE ACCOUNTS RECEIVABLE (CONSOLIDATED)

    09/30/2006     06/30/2006  
 

 

             
Domestic customers   403,747     375,673  
Foreign customers   86,933     71,714  
(-) Advances on export contracts   (58,022 )   (45,333 )
 

 

(-) Allowance for doubtful accounts   (22,473 )   (25,132 )
 

 

    410,185     376,922  


 

             
Current portion   390,796     355,644  
Long-term portion   19,389     21,278  


 

             
The changes in the allowance for doubtful accounts are shown below:            
             
Balance as of June 30, 2006         25,132  
Addition recorded in selling expenses         3,084  
Utilization         (5,743 )
         

Balance as of September 30, 2006         22,473  
     


6. INVENTORIES (CONSOLIDATED)

    09/30/2006   06/30/2006  
 









 
        Provision           Provision      
        for           for      
       Cost   losses   Net      Cost   losses   Net  
 
 
 

 
 
 
                           
Finished products   85,987   (1,533 ) 84,454   108,733   (1,274 ) 107,459  
Work in process   807   -   807   222   -   222  
Raw materials   38,389   (82 ) 38,307   34,679   (79 ) 34,600  
Liquefied petroleum gas                          
 (LPG)   15,165   -   15,165   22,351   -   22,351  
Supplies and cylinders for                          
 resale   16,847   (458 ) 16,389   18,491   (773 ) 17,718  
Advances to suppliers -                          
 mainly LPG   13,205   -   13,205   14,900   -   14,900  
 
 
 

 
 
 
    170,400   (2,073 ) 168,327   199,376   (2,126 ) 197,250  
 
 
 

 
 
 
                           
The changes in the provision for losses on inventories are shown below:
                           
Balance as of June 30, 2006                       2,126  
Addition                       2,278  
Reversal                       (2,331 )
                       
 
Balance as of September 30, 2006                       2,073  
                       
 

11






Ultrapar Participações S.A. and Subsidiaries

7. RECOVERABLE TAXES

Represented substantially by credit balances of ICMS (state VAT), IPI (federal VAT), PIS and COFINS (taxes on revenue), and income and social contribution taxes.

    Company   Consolidated  






 
    09/30/2006   06/30/2006   09/30/2006   06/30/2006  

 

 
 
                   
Income and social contribution taxes   24,714   22,365   60,101   53,927  
ICMS   -   -   83,885   77,344  
Provision for losses - ICMS (*)   -   -   (36,755 ) (39,433 )
PIS and COFINS   54   22   30,574   32,917  
IPI   -   -   1,992   287  
VAT of subsidiary Canamex                  
 Químicos S.A. de C.V.   -   -   10,220   7,146  
Other   70   41   541   716  

 

 
 
Total   24,838   22,428   150,558   132,904  

 

 
 
                   
Current portion   15,363   16,825   102,802   90,491  
Long-term portion   9,475   5,603   47,756   42,413  

 

 
 

(*)      The provision refers to credit balances that the subsidiaries estimate they will be unable to offset in the future.
   
The changes in the provision for losses on ICMS are shown below:      
       
Balance as of June 30, 2006   39,433  
Addition   4,852  
Reversal   (7,530 )
   
 
Balance as of September 30, 2006   36,755  
   
 

8. RELATED COMPANIES

    Company

    Assets   Liabilities
   
 
         
Ultracargo - Operações Logísticas e Participações Ltda.   -   390,947
Melamina Ultra S.A. - Indústria Química   -   456
Oxiteno S.A. - Indústria e Comércio   25,504   -
Oxiteno Nordeste S.A. - Indústria e Comércio   -   33,000
Ultragaz Participações Ltda.   9,951   -
Companhia Ultragaz S.A.   2,939   -
Imaven Imóveis e Agropecuária Ltda.   -   22,658
   
 
Total as of September 30, 2006   38,394   447,061
   
 
         
Total as of June 30, 2006   20,409   447,061
   
 

12






Ultrapar Participações S.A. and Subsidiaries

    Consolidated  

 
    Loans   Trade accounts  

 
 
    Assets   Liabilities   Receivable   Payable  


 

 
                   
Química da Bahia Indústria e Comércio S.A.   -   3,903   -   -  
Serma Associação dos Usuários de Equipamentos de                  
 Processamentos de Dados e Serviços Correlatos   5,652   -   -   -  
Petroquímica União S.A.   -   -   -   1,809  
Oxicap Indústria de Gases Ltda.   -   -   -   945  
Liquigás Distribuidora S.A.   -   -   182   -  
Petróleo Brasileiro S.A. - Petrobras   -   -   3,481   -  
Copagaz Distribuidora de Gás Ltda.   -   -   103   -  
Braskem S.A.   -   -   -   5,666  
SHV Gás Brasil Ltda.   -   -   98   -  
Plenogás - Distribuidora de Gás S.A.   -   871   -   -  
Other   19   257   49   -  


 

 
Total as of September 30, 2006   5,671   5,031   3,913   8,420  


 

 
                   
Total as of June 30, 2006   5,273   5,060   11,605   29,525  


 

 
                   
                   
        Consolidated  





 
        Transactions   Financial
income
(expenses)
 



        Sales   Purchases    

 
 
 
                   
Petroquímica União S.A.       -   100,415   -  
Oxicap Indústria de Gases Ltda.       -   6,682   -  
Liquigás Distribuidora S.A.       2,510   -   -  
Química da Bahia Indústria e Comércio S.A.       -   -   (232 )
Petróleo Brasileiro S.A. - Petrobras       23   1,499,998   -  
Copagaz Distribuidora de Gás Ltda.       767   -   -  
Braskem S.A.       38,196   463,890   -  
SHV Gás Brasil Ltda.       751   -   -  
Other       652   -   -  
     
 

 
Total as of September 30, 2006       42,899   2,070,985   (232 )
     
 

 
                   
Total as of September 30, 2005       64,124   2,090,638   (357 )
     
 

 

The loan balance with Química da Bahia Indústria e Comércio S.A. is adjusted based on the Brazilian long-term interest rate (TJLP). Other loans are not subject to financial charges. Purchase and sale transactions refer substantially to purchases of raw materials, other materials and transportation and storage services, carried out at market prices and conditions.

The loan agreement with Ultracargo - Operações Logísticas e Participações Ltda. results substantially from the sale of shares issued by Oxiteno S.A. - Indústria e Comércio to the Company, so as to avoid cross shareholding resulting from a corporate restructuring conducted in 2002.

13






Ultrapar Participações S.A. and Subsidiaries

9. INCOME AND SOCIAL CONTRIBUTION TAXES

a)      Deferred income and social contribution taxes
   
  The Company and its subsidiaries recognize tax assets and liabilities, which do not expire, arising from tax loss carryforwards, temporary add-backs, revaluation of property, plant and equipment, and other procedures. The tax credits are based on continuing profitability from operations. Deferred income and social contribution taxes are presented in the following principal categories:
   
    Company   Consolidated






    09/30/2006   06/30/2006   09/30/2006   06/30/2006

 

 
                 
Assets:                
     Deferred income and social                
       contribution taxes on:                
       Provision for loss of assets   -   -   21,940   23,747
       Provision for contingencies   3,036   2,976   11,903   11,684
       Other provisions   37   42   25,657   21,563
       Income and social                
           contribution tax loss                
           carryforwards   -   -   40,163   37,801

 

 
Total   3,073   3,018   99,663   94,795

 

 
                 
Current portion   37   42   25,890   22,255
Long-term portion   3,036   2,976   73,773   72,540

 

 
                 
Liabilities:                
    Deferred income and social                
       contribution taxes on:                
       Revaluation of property, plant                
           and equipment   -   -   956   1,049
       Income earned abroad   -   -   24,255   23,907

 

 
Total   -   -   25,211   24,956

 

 
                 
Current portion   -   -   191   210
Long-term portion   -   -   25,020   24,746

 

 

14






Ultrapar Participações S.A. and Subsidiaries

 

The estimated recovery of deferred income and social contribution assets is shown below:

   
      Company   Consolidated
     
 
           
  To through 2006   37   25,890
  2007   -   27,086
  2008   3,036   18,973
  2009   -   27,714
     
 
      3,073   99,663
     
 

b)      Conciliation of income and social contribution taxes in the statements of income Income and social contribution taxes are reconciled to statutory tax rates as follows:
   
      Company   Consolidated  






 
      09/30/2006   09/30/2005   09/30/2006   09/30/2005  

 

 
 
                     
  Income (loss) before taxes, equity                  
   in subsidiaries and affiliated                  
   companies and minority interest   4,193   398   272,040   298,062  
  Statutory tax rates - %   34.00   34.00   34.00   34.00  

 

 
 
  Income and social contribution                  
   taxes at statutory rates   (1,426 ) (135 ) (92,494 ) (98,281 )

 

 
 
  Adjustments to the effective tax                  
  rate:                  
   Operating provisions and                  
       nondeductible                  
  expenses/nontaxable income   (13 ) 19   8,599   11,499  
   Adjustments to estimated                  
       income   -   -   1,360   880  
   Interest on Capital   (4,893 ) -   -   -  
   Workers’ meal program (PAT)   -   -   649   459  
             
     
   Other   -   -   411   247  

 

 
 
  Income and social contribution                  
   taxes before benefit of tax                  
   holidays   (6,332 ) (116 ) (81,475 ) (85,196 )

 

 
 
  Benefit of tax holidays - ADENE   -   -   46,105   54,701  
  Income and social contribution                  
   taxes in the statements of                  
   income   (6,332 ) (116 ) (35,370 ) (30,495 )

 

 
 
                     
  Current   (6,469 ) (374 ) (101,692 ) (104,425 )
  Deferred   137   258   20,217   19,229  
  Benefit of tax holidays - ADENE   -   -   46,105   54,701  

The benefit of tax holidays of subsidiaries in the amount of R$46,105 as of September 30, 2006 (R$54,701 as of September 30, 2005), derived substantially from operations in regions entitled to incentive, are classified as income and social contribution taxes in the statements of income.

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Ultrapar Participações S.A. and Subsidiaries

c)      Tax exemption
 
  The following indirect subsidiaries have partial or full exemption from income tax in connection with a government program for the development of the Northeast Region of Brazil:
 
          Exemption   Expiration
  Subsidiary   Plants   - %   date
 
 
 
 
  Oxiteno Nordeste S.A. - Indústria e            
     Comércio   Camaçari plant   100   2006
               
  Bahiana Distribuidora de Gás Ltda.   Mataripe unit   75   2013
      Suape unit   100   2007
      Ilhéus unit   25   2008
      Aracaju unit   25   2008
      Caucaia unit   75   2012
  Terminal Químico de Aratu S.A. -            
     Tequimar (*)   Aratu Terminal   75   2012

  (*)      In December 2005, the Suape unit’s exemption expired and a request was filed with ADENE (Northeast Development Agency), the agency in charge of managing this incentive program, seeking a 75% income tax reduction until 2015. This reduction was granted on April 22, 2006. On June 8, 2006, the incentive-granting report issued by ADENE was forwarded to the Federal Revenue Service (SRF) for approval within 120 days. Should such request not be approved, the company will file a new request, for an income tax reduction of 25% until 2008 and 12.5% from 2009 until 2013, to which it is entitled as it is located in an incentive area and considered a priority economic activity for the region’s development. On October 06, 2006 the Federal Revenue Service’s deadline for approval of this reduction expired, meaning that the Company can automatically be considered fully entitled to the intended reduction, as long as no decision to the contrary arises. However, for this quarter, no reduction regarding the Suape unit was yet considered.
 

10. INVESTMENTS

a)      Subsidiaries of the Company
 
          Equity in subsidiaries
      Investments   and affiliated companies
     
 
      09/30/2006   06/30/2006   09/30/2006   09/30/2005
     
 
 
 
                   
  Ultragaz Participações Ltda.   352,100   312,902   86,039   25,409
  Ultracargo - Operações Logísticas e                
      Participações Ltda.   600,008   598,834   2,770   9,229
  Imaven Imóveis e Agropecuária Ltda.   49,493   48,419   3,420   3,600
  Oxiteno S.A. - Indústria e Comércio   1,379,770   1,333,070   149,942   219,022
     
 
 
 
      2,381,371   2,293,225   242,171   257,260
     
 
 
 

16






Ultrapar Participações S.A. and Subsidiaries

b)      Affiliated companies (consolidated)
 
          Equity in subsidiaries
      Investments   and affiliated companies
     
 
      09/30/2006   06/30/2006   09/30/2006   09/30/2005
     
 
 
 
  Química da Bahia Indústria e Comércio                  
   S.A.   3,404   3,398   641   1,407  
  Oxicap Indústria de Gases Ltda.   1,472   1,430   55   (12 )
     
 
 
 
      4,876   4,828   696   1,395  
     
 
 
 
 
   
  The investment of subsidiary Oxiteno S.A. - Indústria e Comércio in the affiliated company Oxicap Indústria de Gases Ltda. and the investment of subsidiary Oxiteno Nordeste S.A. - Indústria e Comércio in the affiliated company Química da Bahia Indústria e Comércio S.A. are carried under the equity method based on the affiliates’ financial statements as of August 31, 2006 and as of September 30, 2006, respectively.
   
   
   

11. PROPERTY, PLANT AND EQUIPMENT (CONSOLIDATED)

        09/30/2006   06/30/2006
    Annual
depreciation
rates - %
 
 
      Revalued
cost
  Accumulated
depreciation
    Provision
for losses
    Net book
value
  Net book
value
                 
   
 
 
   
   
 
Land   -   46,278   -     -     46,278   46,099
Buildings   4 to 5   427,225   (160,535 )   (604 )   266,086   272,527
Machinery and equipment   5 to 10   884,004   (454,401 )   (412 )   429,191   433,681
Gas tanks and cylinders   10   270,054   (154,752 )   -     115,302   117,837
Vehicles   20 to 25   164,910   (125,858 )   -     39,052   41,930
Furniture and fixtures   10   23,547   (9,902 )   -     13,645   13,560
Construction in progress   -   93,700   -     -     93,700   70,046
Imports in transit   -   34   -     -     34   147
Intangibles   2.5 to 20   116,132   (52,529 )   (631 )   62,972   61,597
Other   20 to 30   80,919   (33,371 )   -     47,548   31,769
       
 
   
   
 
        2,106,803   (991,348 )   (1,647 )   1,113,808   1,089,193
       
 
   
   
 

The changes in the provision for losses on property, plant and equipment are shown below:

Balance as of June 30, 2006   3,450  
Realization   (1,803 )
   
 
Balance as of September 30, 2006   1,647  
   
 

The subsidiaries recorded, in previous years, revaluation of property, plant and equipment items. The revaluation balances are shown below:

    09/30/2006   06/30/2006
   
 
              Net    
        Accumulated     book   Net book
    Revaluation   depreciation     value   value
   
 
   
 
Land   15,504   -     15,504   15,504
Buildings   45,335   (34,970 )   10,365   11,121
Machinery and equipment   31,738   (30,591 )   1,147   1,211
Vehicles   990   (990 )   -   -
Gas tanks and cylinders   48,911   (48,911 )   -   -
   
 
   
 
    142,478   (115,462 )   27,016   27,836
   
 
   
 

17






Ultrapar Participações S.A. and Subsidiaries

The depreciation of theses revaluations in the amount of R$1,424 was recorded in the statements of income. The amount of deferred taxes on revaluations totals R$7,760, of which R$956 is recorded as long-term liabilities, as shown in Note 9.a), and R$6,804 is accrued in the same period in which certain subsidiaries realize the revaluation reserve, since these revaluations occurred prior to the issuance of CVM Resolution No. 183/95.

Construction in progress refers substantially to improvements of subsidiaries’ plants.

Buildings include R$65,949 (R$71,495 as of June 30, 2006) of leasehold improvements that are being amortized on a straight-line basis at 4% per year.

Intangibles include software in the amount of R$25,556 (R$24,311 as of June 30, 2006), technology in the amount of R$16,029 (R$15,607 as of June 30, 2006), goodwill in the amount of R$6,257 (R$6,412 as of June 30, 2006) and commercial property rights, mainly those described below:

On July 11, 2002, the subsidiary Terminal Químico de Aratu S.A. - Tequimar won a bid for use of the site where the Aratu Terminal is located for another 20 years, renewable for the same period. The price paid by Tequimar amounted to R$12,000 and is being amortized from August 2002 to July 2042.
   
Further, the subsidiary Terminal Químico de Aratu S.A. - Tequimar has a lease agreement for an area adjacent to the Port of Santos for 20 years, effective December 2002 and renewable for another 20 years, for building and operating a terminal for receiving, tankage, handling and distribution of bulk liquids. The price paid by Tequimar was R$3,803 and is being amortized from August 2005 until December 2022.

Other refers to computer equipment in the amount of R$12,842 (R$12,831 as of June 30, 2006) and advances to suppliers in the amount of R$34,709 (R$18,941 as of June 30, 2006).

There were no changes in the valuation allowance for property, plant and equipment during the period presented.

12. DEFERRED CHARGES (CONSOLIDATED)

Represented substantially by costs incurred in the implementation of systems modernization projects in the amount of R$8,106 (R$9,522 as of June 30, 2006), amortized over five to ten years, and for costs associated with the installation of Ultrasystem equipment at customers’ facilities in the amount of R$62,096 (R$62,003 as of June 30, 2006), amortized over the terms of the LPG supply contracts with these customers. Deferred charges also include the goodwill from acquisitions and expenses on studies and projects.

18






Ultrapar Participações S.A. and Subsidiaries

13. LOANS, FINANCING AND DEBENTURES (CONSOLIDATED)

a)      Composition
 

 

                           
  Description   09/30/2006     06/30/2006     Index/Currency   Annual interest
rate 2006 - %
  Maturity and amortization
 
 
   
   
 
 
  Foreign currency:                        
   Syndicated loan   132,300     130,022     US$   5.05   Semiannually until 2008
   Notes (b)   688,275     672,412     US$   From 7.25 to 9.0   Semiannually until 2020
   Working capital loan   2,454     7,932     MX$ + TIIE (i)   1.0   Monthly until 2006
   Foreign financing   26,106     26,457     US$ + LIBOR   2.0   Semiannually until 2009
   Inventories and property,                        
       plant and equipment                        
       financing   13,847     8,765     MX$ + TIIE (i)   From 1.25 to 2.0   Semiannually until 2011
   Advances on foreign                        
       exchange contracts   2,559     5,313     US$   From 5.27 to 5.80   Maximum of 60 days
   National Bank for Economic                        
       and Social Development                   From 8.87 to    
       (BNDES)   15,105     17,420     UMBNDES (ii)   10.62   Monthly until 2011
   National Bank for Economic                        
       and Social Development                   From 7.92 to   After Nov/06, monthly
       (BNDES)   4,188     2,593     US$   11.07   until 2012
   Export prepayments, net of                        
       linked operations   11,058     15,034     US$   6.20   Semiannually until 2008
     
   
             
  Subtotal   895,892     885,948              
     
   
             
  Local currency:                        
   National Bank for Economic                        
       and Social Development                        
       (BNDES)   160,428     161,577     TJLP (iii)   From 1.50 to 4.85   Monthly until 2012
   National Bank for Economic                        
       and Social Development                        
       (BNDES)   6,789     9,116     IGP-M (iv)   6.5   Semiannually until 2008
     Government Agency for                        
       Machinery and Equipment                        
       Financing (FINAME)   43,863     47,971     TJLP (iii)   From 2.5 to 4.85   Monthly until 2011
   Research and project                        
       financing (FINEP)   49,630     51,299     TJLP (iii)   From (2.0) to 5.0   Monthly until 2013
   Debentures (c)   303,075     315,346     CDI   102.5   Semiannually until 2008
   Other   414     411              
     
   
             
  Subtotal   564,199     585,720              
     
   
             
  Total loans, financing and                        
   debentures   1,460,091     1,471,668              
     
   
             
  Current liabilities   (124,002 )   (135,609 )            
     
   
             
  Long-term liabilities   1,336,089     1,336,059              
     
   
             

(i)      MX$ = Mexican peso; TIIE = Mexican break-even interbank interest rate.
 
(ii)      UMBNDES = BNDES monetary unit. This is a “basket” of currencies representing the composition of the BNDES debt in foreign currency, 92%, of which is linked to the U.S. dollar.
 
(iii)      TJLP = fixed by the CMN (National Monetary Council); TJLP is the basic cost of BNDES financing.
 
(iv)      IGP-M = General Market Price Index, a measure of Brazilian inflation calculated by the Getúlio Vargas Foundation.
 

19






Ultrapar Participações S.A. and Subsidiaries

    The long-term amounts have the following composition by year of maturity:
           
      09/30/2006   06/30/2006
     
 
  From 1 to 2 years   519,911   389,849
  From 2 to 3 years   97,667   204,617
  From 3 to 4 years   29,052   59,697
  From 4 to 5 years   9,695   6,479
  More than 5 years   679,764   675,417
     
 
      1,336,089   1,336,059
     
 

b)      Notes in the foreign market
 
  In June 1997, the subsidiary Companhia Ultragaz S.A. issued US$60 million in notes, (Original Notes), maturing in 2005. In June 2005, maturity was extended to June 2020, with put/call options in June 2008.
 
  In June 2005, the subsidiary Oxiteno Overseas Corp. acquired the full amount of Original Notes issued by Companhia Ultragaz S.A., with funds from a syndicated loan in the amount of US$60 million with maturity in June 2008 and interest rate of 5.05% per year. The syndicated loan was guaranteed by the Company and the subsidiary Oxiteno S.A. - Indústria e Comércio.
 
  In April 2006, the subsidiary Oxiteno Overseas Corp. sold the Original Notes to a financial institution. Concurrently, the subsidiary acquired from this financial institution a credit linked note backed by the Original Notes, as mentioned in Note 4, thus obtaining an additional return on this investment. The transaction matures in 2020, and the subsidiary as well as the financial institution may redeem it early, with the subsidiary having only an annual option of redemption (purchase) in or after June 2008. In the event of insolvency of the financial institution, Companhia Ultragaz S.A. would be required to settle the Original Notes, although Oxiteno Overseas Corp. would continue to be creditor of the credit linked note. Thus, the Company stopped eliminating the Original Notes in its financial statements.
 
  In December 2005, the subsidiary LPG International Inc. issued notes in the amount of US$250 million, maturing in December 2015, with annual interest rate of 7.25% paid semiannually, with the first payment scheduled for June 2006. The issue price was 98.75% of the notes’ face value, which represented a total yield for investors of 7.429% per year upon issuance. The notes were guaranteed by the Company and by Oxiteno S.A. - Indústria e Comércio.
 
  As a result of the issuance of notes and the syndicated loan, the Company and its subsidiaries mentioned above are subject to covenants that limit, among other things:
     
  Limitation of transactions with shareholders that hold amounts of 5% or more of any class of Capital Stock of Ultrapar, except upon fair and reasonable terms no less favorable to Ultrapar than could be obtained in a comparable arm’s-length transaction with a third party;

 

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Ultrapar Participações S.A. and Subsidiaries

  Obligation of having board of directors resolution for transactions with related parties higher than US$15 million (excluding transactions by the Company with subsidiaries and between subsidiaries);
     
  Restriction of disposal of the totality or near totality of the assets of Ultrapar and subsidiaries;
     
  Restriction of encumbrances on assets in excess of US$150 million or 15% of the value of consolidated tangible assets;
     
  Maintenance of financial ratio, between consolidated net debt and consolidated EBITDA, less than or equal to 3.5; and
     
  Maintenance of financial ratio, between consolidated EBITDA and consolidated net financial expenses higher than or equal to 1.5.

  The restrictions imposed on the Company and its subsidiaries are usual in transactions of this nature and have not limited their ability to conduct their business to date.
   
c)      Debentures
 
  On February 2, 2005, the Extraordinary Stockholders’ Meeting approved the issuance by the Company and the public distribution in a single series of 30,000 nonconvertible debentures with nominal unit value of R$10,000.00 (ten thousand Brazilian reais), totaling R$300,000.
 
  On March 30, 2005, the Company’s Board of Directors, as delegated by the Extraordinary Stockholders’ Meeting, approved the interest rate determined through a bookbuilding process on the same date.
 
  On April 6, 2005, the Brazilian Securities Commission (CVM) registered the operation, and funds of R$304,854, net of commission, were received on April 8, 2005.
 
  Characteristics of the debentures are:
 
  Nominal unit value:   R$10,000.00
  Final maturity:   March 1, 2008
  Nominal value payment:   Lump sum at final maturity
  Yield:   102.5% of CDI
  Yield payment:   Semiannually, beginning March 1, 2005
  Repricing:   None
       
  The debentures are subject to commitments that restrict, among other things, certain operations of merger or spin-off, as well as the disposal of operating assets that would result in a reduction of more than 25% of consolidated net sales, and also included the obligation to maintain a consolidated net debt to EBITDA ratio less than or equal to 3.5. Thus far, none of these commitments have restricted the ability of the Company and its subsidiaries to conduct business.

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Ultrapar Participações S.A. and Subsidiaries

d)      Collateral
 
  A portion of the financing is collateralized by liens on property, plant and equipment, shares, promissory notes and guarantees provided by the Company and its subsidiaries, as shown below:
 
      09/30/2006   06/30/2006
     
 
  Amount of financing secured by:        
     Property, plant and equipment   46,503   51,456
     Shares of affiliated companies and minority        
        Stockholders’ guarantees   6,789   9,115
     
 
      53,292   60,571
     
 

  Other loans are collateralized by guarantees issued by the Company and by the future flow of exports. The Company is responsible for sureties and guarantees offered on behalf of its subsidiaries, amounting to R$1,057,043 (R$1,047,540 as of June 30, 2006).
   
  Certain subsidiaries have issued guarantees to financial institutions related to amounts owed to those institutions by some of their customers (vendor financing). In the event any subsidiary is required to make a payment under the guarantees, the subsidiary may recover such amounts paid directly from its customers through commercial collection. Maximum future payments related to these guarantees amount to R$32,854 (R$26,349 as of June 30, 2006), with terms of up to 210 days. As of September 30, 2006, the Company and its subsidiaries have not incurred any loss nor recorded any liability related to these guarantees.
   
  Certain subsidiaries have conducted operations denominated “supplier finance” with its suppliers. In the operation, the banks advance to suppliers the proceeds from sales made to the subsidiaries, through acceptance by the subsidiaries with the banks. Those operations have an average term of nine days and are recorded as bank loans, since the suppliers received the funds from the banks, using the subsidiaries’ credit. The amount as of September 30, 2006 totalized R$412 (R$411 as of June 30, 2006). Financial income related to this operation for the quarter amounted to R$8 (R$7 as of June 30, 2006) and is recorded in financial income.

14. STOCKHOLDERS’ EQUITY

a)      Capital
 
  The Company is a listed corporation with shares traded on the São Paulo and New York Stock Exchanges. Subscribed and paid-up capital is represented by 81,325,409 shares without par value, comprised of 49,429,897 common and 31,895,512 preferred shares.
 
  As of September 30, 2006, 11,794,961 preferred shares were outstanding abroad, in the form of American Depositary Receipts - ADRs.
 
  Preferred shares are not convertible into common shares, do not entail voting rights, and have priority in capital redemption, without premium, in the event of liquidation of the Company.
 

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Ultrapar Participações S.A. and Subsidiaries

 

  At the beginning of 2000, the Company granted, through a stockholders agreement, tag- -along rights, which assure to minority stockholders identical conditions to those negotiated by the controlling shareholders in case of disposal of shareholding control of the Company. The tag-along rights guarantee 100% of the offer amount for all types of shares of the Company. On May 18, 2004, the Company included the tag-along rights in its bylaws.
   
  The Company is authorized to increase its capital, regardless of amendment to the bylaws, through a resolution of the Board of Directors, until it reaches R$1,500,000 (one billion and five hundred million reais), by means of issuance of common or preferred shares, without keeping the existing ratio, observed the limit of 2/3 of preferred shares to the total shares issued.

b)      Treasury shares
 
  The Company acquired its own shares at market price, without capital reduction, for holding in treasury and subsequent disposal or cancellation, in accordance with the provisions of Brazilian Securities Commission (CVM) Instructions No. 10, of February 14, 1980, and No. 268, of November 13, 1997.
 
  As of September 30, 2006, the Company’s financial statements record 213,497 preferred shares and 6,617 common shares in treasury, which were acquired at the average cost of R$27.59 and R$19.30 per share, respectively. The consolidated financial statements record 408,647 preferred shares and 6,617 common shares in treasury, which were acquired at the average cost of R$25.27 and R$19.30 per share, respectively.
 
  The market price of preferred shares issued by the Company as of September 30, 2006 on the São Paulo Stock Exchange (BOVESPA) was R$38.40.
 
c)      Capital reserve
 
  The capital reserve in the amount of R$2,046 reflects the goodwill on the disposal of shares to be held in treasury in the Company’s subsidiaries, at the average price of R$33.21 per share. Executives of these subsidiaries were given the usufruct of such shares, as described in Note 21.
 
d)      Revaluation reserve
 
  This reserve reflects the revaluation write-up of assets of subsidiaries and is realized based upon depreciation, write-off or disposal of revalued assets, including the related tax effects.
 
  In some cases, taxes on the revaluation reserve of certain subsidiaries are recognized only upon the realization of this reserve, since the revaluations occurred prior to the publication of CVM Resolution No. 183/95. Taxes on these reserves are R$6,804 (R$7,026 as of June 30, 2006).
 
e)      Retention of profits reserve
 
  This reserve is supported by the investment program, in conformity with article 196 of Brazilian corporate law, and includes both a portion of net income and the realization of the revaluation reserve.
 

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Ultrapar Participações S.A. and Subsidiaries

f)      Realizable profits reserve
 
  This reserve is established in conformity with article 197 of Brazilian corporate law, based on the equity in subsidiaries and affiliated companies. Realization of the reserve usually occurs upon receipt of dividends, disposal and write-off of investments.
 
g)      Conciliation of stockholders’ equity - Company and consolidated
 

 

      09/30/2006     06/30/2006  
     
   
 
  Stockholders’ equity - Company   1,962,270     1,946,719  
  Treasury shares held by subsidiaries, net of realization   (3,429 )   (3,539 )
  Capital reserve arising from sale of treasury shares to            
      subsidiaries, net of realization   (1,563 )   (1,615 )
     
   
 
  Stockholders’ equity - consolidated   1,957,278     1,941,565  
     
   
 
h)      Reconciliation of net income - Company and consolidated
 
  The reconciliation of net income, Company and consolidated, shows the effect of the reversal of the allowance for scheduled factory maintenance shutdown of some subsidiaries, net of income and social contribution taxes, recorded in retained earnings, in accordance with CVM Resolution No. 489/05 and Technical Interpretation No. 01/2006 by IBRACON, as follows:
 
      09/30/2006     09/30/2005
     
   
  Net income - Company   240,032     257,542
  Reversal of allowance for factory maintenance shutdown by          
     the subsidiary Oxiteno S.A. Indústria e Comércio   (796 )   -
  Reversal of allowance for factory maintenance shutdown by          
     the subsidiary Oxiteno Nordeste S.A. Indústria e Comércio   (5,513 )   -
     
   
  Net income - consolidated   233,723     257,542
     
   

15.      NONOPERATING EXPENSES, NET (CONSOLIDATED)
 
  Composed mainly of R$12,871 in expenses on studies and projects, and R$11,986 (R$3,967 as of September 30, 2005) of result on the disposal of permanent assets and allowance for loss on the disposal of an investment.
 

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Ultrapar Participações S.A. and Subsidiaries

16.      CONCILIATION OF EBITDA (CONSOLIDATED)
 
  EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is calculated by the Company as shown below:
 
      09/30/2006     09/30/2005  
     
   
 
      Ultragaz   Oxiteno     Ultracargo   Other     Consolidated     Consolidated  
     
 
   
 
   
   
 
  Operating income from                                
     operations   122,683   160,454     4,312   6,198     293,647     293,681  
  (-) Equity in                                
     subsidiaries and                                
     affiliated companies   -   (2,762 )   -   2,066     (696 )   (1,395 )
  (+/-) Financial income                                
     (expense)   14,609   (46,278 )   4,218   (4,501 )   (31,952 )   28,224  
  (+) Depreciation and                                
     amortization   84,819   34,046     20,404   556     139,825     138,973  
     
 
   
 
   
   
 
  EBITDA   222,111   145,460     28,934   4,319     400,824     459,483  
     
 
   
 
   
   
 

17.      SEGMENT INFORMATION
 
  The Company has three reportable segments: gas, chemicals and logistics. The gas segment distributes LPG to retail, commercial and industrial consumers mainly in the South, Southeast and Northeast Regions of Brazil. The chemicals segment primarily produces ethylene oxide, ethylene glycols, ethanolamines and etherglycols. Operations in the logistics segment include storage and transportation, mainly in the Southeast and Northeast Regions of Brazil. Reportable segments are strategic business units that offer different products and services. Intersegment sales are transacted at prices approximating those that the selling entity is able to obtain with third parties.
 
  The principal financial information about each of the Company’s reportable segments is as follows:
 
      09/30/2006     09/30/2005  
     
   
 
      Ultragaz   Oxiteno     Ultracargo   Other     Consolidated     Consolidated  
     
 
   
 
   
   
 
  Net sales, net of related-party                                
   transactions   2,291,569   1,162,313     136,326   65     3,590,273     3,568,289  
  Income from operations                                
   before financial income                                
   (expenses) and equity in                                
   subsidiaries and affiliated                                
   companies   137,292   111,414     8,530   3,763     260,999     320,510  
  EBITDA   222,111   145,460     28,934   4,319     400,824     459,483  
  Total assets, net of related                                
   parties   876,603   2,224,506     296,937   336,663     3,734,709     2,978,736  

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Ultrapar Participações S.A. and Subsidiaries

18. FINANCIAL INCOME AND EXPENSES, NET (CONSOLIDATED)

    01/01/2006     01/01/2005  
    to     to  
    09/30/2006     09/30/2005  
   
   
 
Financial income:            
 Interest on temporary cash investments and            
    long-term cash investment
  124,565     90,528  
 Interest on trade accounts receivable   3,831     3,696  
 Monetary and exchange variations income   (12,546 )   (24,767 )
 Other income   1,411     1,914  
   
   
 
    117,261     71,371  
Financial expenses:            
 Interest on loans and financing   (64,885 )   (30,818 )
 Interest on debentures   (35,108 )   (27,975 )
 Bank charges   (9,825 )   (12,700 )
 Monetary and exchange variations expenses   14,707     43,121  
 Financial results from currency hedge transactions   (14,441 )   (49,493 )
 CPMF/IOF/other financial expenses (*)   28,300     (19,636 )
 Other expenses   (4,057 )   (2,094 )
   
   
 
    (85,309 )   (99,595 )
Financial results   31,952     (28,224 )
   
   
 

(*)      In 2006, includes R$17,217 referring to the reversal of the provision for PIS and COFINS contingencies and R$26,225 related to the recovery of PIS and COFINS mentioned in Note 20 a).
 
In accordance with CVM Resolution No. 488/05 the information as of September 30, 2005 was reclassified for better comparison.

19.      RISKS AND FINANCIAL INSTRUMENTS (CONSOLIDATED)

The main risk factors to which the Company and its subsidiaries are exposed reflect strategic/operating and economic/financial aspects. Strategic/operating risks (such as behavior of demand, competition, technological innovation, and significant structural changes in industry, among others) are addressed by the Company’s management model. Economic/financial risks mainly reflect customer default, macroeconomic variables such as exchange and interest rates, as well as the characteristics of the financial instruments used by the Company. These risks are managed through control policies, specific strategies and the determination of limits, as follows:

Customer default - These risks are managed by specific policies for accepting customers and analyzing credit, and are mitigated by diversification of sales. As of September 30, 2006, the subsidiaries of Oxiteno S.A. - Indústria e Comércio maintained R$918 (R$853 as of June 30, 2006) and the subsidiaries of Ultragaz Participações Ltda. maintained R$21,380 (R$24,055 as of June 30, 2006) as an allowance for doubtful accounts.

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Ultrapar Participações S.A. and Subsidiaries

Interest rates - The Company and its subsidiaries adopt conservative policies to obtain and invest funds and to minimize the cost of capital. Temporary cash investments of the Company and its subsidiaries are comprised substantially of transactions linked to the interbank deposit rate (CDI), as described in Note 4. A portion of the financial assets is intended for foreign currency hedges, as mentioned below. Borrowings are originate from the BNDES, and foreign currency financing, as mentioned in Note 13.
   
Exchange rate - The Company’s subsidiaries use hedge (mainly CDI and US$) instruments available in the financial market to cover assets and liabilities in foreign currency, so as to reduce the exchange variation effects on their results. Such hedges have amounts, periods and indexes substantially equivalent to the assets and liabilities in foreign currency to which they are linked. Shown below are the assets and liabilities in foreign currency, translated into Brazilian reais at September 30, 2006 and June 30, 2006:

      09/30/2006     06/30/2006  
     
   
 
  Assets:            
     Investments abroad and hedges   66,976     79,606  
     Foreign cash and cash equivalents   921     6,552  
     Foreign temporary cash and long-term cash investments   803,649     787,734  
     Receivables from foreign customers, net of advances on            
         exchange contracts   28,698     26,236  
     
   
 
      900,244     900,128  
     
   
 
  Liabilities:            
     Foreign currency financing   895,892     885,948  
     Import payables   16,457     17,691  
     
   
 
      912,349     903,639  
     
   
 
  Net (liability) asset position   (12,105 )   (3,511 )
     
   
 
   
  The exchange rate variation related to cash and banks, investments, temporary cash investments, and long-term cash investments of foreign subsidiaries was recorded as financial expense in the consolidated statement of income for 2006, in the amount of R$12,660 (financial expenses of R$15,856 as of September 30, 2005).
   
Market value of financial instruments
   
  Market value of financial instruments as of September 30, 2006 and June 30, 2006 are as follows:

      09/30/2006   06/30/2006
     
 
      Book   Market   Book   Market
      value   value   value   value
     
 
 
 
  Financial assets:                
   Cash and banks   31,691   31,691   47,256   47,256
   Temporary cash investments   1,029,598   1,028,447   1,064,124   1,061,981
   Long-term cash investments   540,880   540,880   522,376   522,376
     
 
 
 
      1,602,169   1,601,018   1,633,756   1,631,613
     
 
 
 

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Ultrapar Participações S.A. and Subsidiaries

      09/30/2006   06/30/2006
     
 
      Book   Market   Book   Market
      value   value   value   value
     
 
 
 
  Financial liabilities:                
   Current and long-term loans and                
       financing   1,157,016   1,191,148   1,156,322   1,139,673
   Current and long-term debentures   303,075   303,074   315,346   315,203
     
 
 
 
      1,460,091   1,494,222   1,471,668   1,454,876
     
 
 
 
  Investment-                
   Investment in affiliated company   18,694   20,433   18,694   20,919
     
 
 
 
   
  The market value of financial instruments was obtained through the commonly used marking to market methodology, which consists of carrying the balances of the instruments until the maturity at the respective contracted rates, discounting them to present value at market rates as of September 30, 2006 and June 30, 2006. The market value of investment in affiliated company is based on the share price trading on the São Paulo Stock Exchange (BOVESPA).

20. CONTINGENCIES AND COMMITMENTS (CONSOLIDATED)

a)      Labor, civil and tax lawsuits
 
  The Petrochemical Industry Labor Union, of which the employees of Oxiteno Nordeste S.A. - Indústria e Comércio are members, filed an action against the subsidiary in 1990, demanding compliance with the adjustments established in a collective labor agreement, in lieu of the salary policies effectively followed. At the same time, the employers’ association proposed a collective bargaining for the interpretation and clarification of the fourth clause of the agreement. Based on the opinion of its legal counsel, who analyzed the last decision of the Federal Supreme Court (STF) on the collective bargaining, as well as the status of the individual lawsuit of the subsidiary, management believes that a reserve is not necessary as of September 30, 2006.
 
  The subsidiaries Companhia Ultragaz S.A. and SPGás Distribuidora de Gás Ltda. are parties to an administrative proceeding at the SDE (Economic Law Department), linked to CADE (Administrative Council for Economic Defense), under the allegation of anticompetitive practice in the municipalities of a region of the State of Minas Gerais in 2001. In September 2005, the SDE issued a technical notice recommending to CADE a ruling against the companies involved in this proceeding. In their defense, the subsidiaries’ arguments, among others, are that: (i) under the terms of the notice issued by the Company’s chief executive officer on July 4, 2000, the subsidiaries’ employees were forbidden to discuss with third parties matters related to prices; and (ii) no consistent evidence was attached to the proceeding’s records, and the SDE acknowledges its failure in the attempt to prove the practice. In view of the arguments presented, the fact that the technical notice has no binding effect on CADE’s decision, and their legal counsel’s opinion, the subsidiaries did not record a provision for this issue. Should CADE’s decision be unfavorable, the subsidiaries can still discuss the issue at the judicial level.
 

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Ultrapar Participações S.A. and Subsidiaries

 

  The subsidiary Companhia Ultragaz S.A. is a defendant in lawsuits relating to damages caused by an explosion in 1996 in a shopping mall in the city of Osasco, State of São Paulo. Such lawsuits involve: (i) individual suits filed by victims of the explosion claiming damages from Ultragaz for the loss of economic benefit and for pain and suffering; (ii) lawsuit for reimbursement of expenses by the administration company of the shopping mall and its insurance company; and (iii) class action suit seeking indemnification for property damage and pain and suffering for all the victims injured and deceased. The subsidiary believes that it has presented evidence that defective gas pipes in the shopping mall caused the accident and that Ultragaz’s on-site LPG storage facilities did not contribute to the explosion. Of the 56 (fifty six) lawsuits judged thus far, a favorable judgment was obtained for 55 (fifty five), and of these 11 (eleven) have already been dismissed and only 1 (one) had an unfavorable decision, which is still subject to appeal, and whose amount, should the decision be upheld, is R$17. The subsidiary has insurance for this contingency, and the uninsured contingent amount is R$39,633. The Company has not recorded any provision for this amount, since it believes the probability of loss is remote.
   
  The Company and its subsidiaries obtained injunctions to pay PIS and COFINS (taxes on revenues) without the changes introduced by Law No. 9718/98 in its original version. The ongoing questioning refers to the levy of these taxes on sources other than revenues. The unpaid amounts were recorded in the financial statements of the Company and its subsidiaries, totaling R$20,816 (R$20,415 as of June 30, 2006). Recently the Federal Supreme Court (STF) has decided the matter favorable to the taxpayer. Although it is a precedent, the effect of this decision does not automatically apply to all companies, since they must await judgment of their own lawsuits. On 3/29/2006 and 6/14/2006 final and unappealable decisions were rendered on the lawsuits of the subsidiaries Companhia Ultragaz S.A. and Transultra - Armazenagem e Transporte Especializado Ltda., and the subsidiaries reversed the existing provisions in the amount of R$15,886 and R$1,331, net of attorney’s fees, as financial income in the statement of income for the quarter. Likewise, on 04/11/2006, a final and unappealable decision was rendered on the lawsuit related to the subsidiary Oxiteno Nordeste S.A. Indústria e Comércio. As this subsidiary had not obtained an injunction, it paid undue PIS and COFINS in prior periods. The amount of R$26,225, related to the favorable outcome in this lawsuit, net of attorney’s fees, was recorded as financial income and will be used for future offset of federal taxes. The Company has other subsidiaries whose lawsuits have not yet been judged. Thus, should there be final favorable outcomes for the subsidiaries in all lawsuits, the Company estimates that the total positive effect in addition to the already recorded in income before income and social contribution taxes should reach R$20,130, net of attorney’s fees.
   
  The subsidiary Oxiteno S.A. - Indústria e Comércio and its subsidiary Oxiteno Nordeste S.A. - Indústria e Comércio accrued R$15,360 (R$15,098 as of June 30, 2006) for ICMS tax assessments being judged at lower-level and appeal-level administrative courts. The subsidiaries are currently awaiting a decision on the appeals.

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Ultrapar Participações S.A. and Subsidiaries

  The subsidiary Utingás Armazenadora S.A. has been challenging in court ISS (Service Tax) tax assessments issued by the municipal government of Santo André. Legal counsel of the subsidiary classifies the risk as low, since a significant portion of the lower-court decisions was favorable to the subsidiary. The thesis defended by the subsidiary is supported by the opinion of a renowned tax specialist. The unprovisioned updated amount of the contingency as of September 30, 2006 is R$33,010 (R$31,455 as of June 30, 2006).
   
  On October 7, 2005, the subsidiaries of Ultragaz Participações Ltda. filed for and obtained an injunction to support the offset of PIS and COFINS credits against other federal taxes administered by the Federal Revenue Service (SRF), notably income and social contribution taxes. According to the injunction obtained, the subsidiaries have been making escrow deposits for these debits and recognizing the corresponding liability for this purpose.
   
  The Company and its subsidiaries have other ongoing administrative and judicial proceedings; legal counsel classified the risks on these proceedings as possible and/or remote and, therefore, no reserves for potential losses on these proceedings have been recorded.
   
  Escrow deposits and provisions are summarized below:

      Balance                 Balance  
      on                 on  
  Provisions   06/30/2006     Additions     Update     09/30/2006  
 
 
   
   
   
 
  Income and social contribution taxes   16,964     10,178     509     27,651  
  PIS and COFINS on other revenues   20,415     -     401     20,816  
  ICMS   15,098     -     262     15,360  
  (-) Escrow deposits   (10,385 )   (12,886 )   (470 )   (23,741 )
     
   
   
   
 
      42,092     (2,708 )   702     40,086  
     
   
   
   
 

b)      Contracts
 
  The subsidiary Terminal Químico de Aratu S.A. - Tequimar has contracts with CODEBA - Companhia das Docas do Estado da Bahia and Complexo Industrial Portuário Governador Eraldo Gueiros in connection with their port facilities in Aratu and Suape, respectively. Such contracts establish minimum cargo movement of 1,000,000 tons per year for Aratu, effective through 2022, and 250,000 tons per year for Suape, effective through 2027. If annual movement is less than the minimum required, the subsidiary is required to pay the difference between the actual movement and the minimum contractual movement, using the port rates in effect at the date established for payment. As of September 30, 2006, such rates were R$3.67 and R$3.44 per ton for Aratu and Suape, respectively. The subsidiary has met the minimum cargo movement limits since inception of the contracts.
 

30






Ultrapar Participações S.A. and Subsidiaries

  The subsidiary Oxiteno Nordeste S.A. - Indústria e Comércio has a supply contract with Braskem S.A., effective through 2021, which establishes a minimum consumption level of ethylene per year. The minimum purchase commitment and the actual demand for the period ended September 30, 2006 and 2005, expressed in tons of ethylene, are summarized below. Should the minimum purchase commitment not be met, the subsidiary would be liable for a fine of 40% of the current ethylene price for the quantity not purchased.

    Minimum purchase    Actual demand
    commitment   (real) 3rd quarter
   
 


        2006   2005
       
 
             
  In tons 137,900   137,361   147,318
   
 
 

c) Insurance coverage for subsidiaries
 
  The Company has appropriate insurance policies to cover various risks, including loss and damage from fire, lightning, explosion of any nature, windstorm, plane crash and electrical damage, among others, protecting the units and other branches of all subsidiaries, with coverage amounting to US$250 million.
 
  For the units of Oxiteno S.A. - Indústria e Comércio, Oxiteno Nordeste S.A. - Indústria e Comércio and Canamex Químicos S.A. de C.V., there is also loss of income insurance against losses from potential accidents related to their assets, with coverage amounting to US$129 million.
 
  A civil liability insurance program covers all Group companies, with coverage of US$150 million, for losses and damage from accidents caused to third parties, related to the commercial/industrial operations and/or distribution and sale of products and services.
 
  Group life insurance, personal accident insurance, health insurance, and domestic and international transportation insurance are also contracted.

21. STOCK COMPENSATION PLAN (CONSOLIDATED)

The Extraordinary Stockholders’ Meeting held on November 26, 2003 approved a compensation plan for management of the Company and its subsidiaries, which provides for: (i) the initial grant of usufruct of shares issued by the Company and held in treasury by the subsidiaries in which the beneficiaries are employed; and (ii) the transfer of the beneficial ownership of the shares after ten years from the initial grant, provided that the professional relationship between the beneficiary and the Company and its subsidiaries is not interrupted. The total amount granted to executives until September 30, 2006, including taxes, was R$8,940 (R$8,940 as of June 30, 2006). This amount is being amortized over a period of ten years and the amortization related to the period ended September 30, 2006, in the amount of R$669 (R$574 as of September 30, 2005), was recorded as an operating expense.

31






Ultrapar Participações S.A. and Subsidiaries

22. EMPLOYEE BENEFITS AND PRIVATE PENSION PLAN (CONSOLIDATED)

The Company and its subsidiaries offer benefits to their employees, such as life insurance, health care and pension plan. In addition, loans for the acquisition of vehicles and personal computers are available to employees of certain subsidiaries. These benefits are recorded on the accrual basis and terminate at the end of the employment relationship.

In August 2001, the Company and its subsidiaries began to provide a defined contribution pension plan to their employees. This plan is managed by Ultraprev - Associação de Previdência Complementar. Under the terms of the plan, the basic contribution of each participating employee is defined annually by the participant between 0% and 11% of his/her salary. The sponsoring companies provide a matching contribution in an identical amount as the basic contribution. As participants retire, they may opt to receive monthly: (i) a percentage varying between 0.5% and 1.0% of the fund accumulated in their name in Ultraprev; or (ii) a fixed-monthly amount that will deplete the fund accumulated in the participant’s name in a period of 5 to 25 years. Accordingly, neither the Company nor its subsidiaries assume responsibility for guaranteeing the levels of amounts or periods of receipt of the retirement benefit. In 2006, the Company and its subsidiaries contributed R$2,517 (R$2,199 in 2005) to Ultraprev, which was charged to income for the period. The total number of participating employees as of September 30, 2006 was 5,714, with no participants retired to date. Additionally, Ultraprev has 1 active participant and 31 former employees receiving defined benefits according to the policies of a previous plan.

32




Ultrapar Participações S.A. and Subsidiaries

23. SUPPLEMENTARY INFORMATION OF THE STATEMENTS OF CASH FLOWS -INDIRECT METHOD (CONSOLIDATED)

Prepared in accordance with Accounting Standard and Procedure (NPC) No. 20 issued by IBRACON (Brazilian Institute of Independent Auditors).

    09/30/2006     09/30/2005  
   
   
 
Cash flows from operating activities:            
 Net income   233,723     257,542  
 Adjustments to reconcile net income to cash provided by            
       operating activities:            
         Equity in subsidiaries and affiliated companies   (696 )   (1,395 )
         Depreciation and amortization   139,825     138,973  
         PIS and COFINS credits on depreciation   1,597     943  
         Interest, foreign exchange and indexation   11,843     (6,432 )
         Deferred income and social contribution taxes   (15,861 )   (19,992 )
         Minority interest   3,643     2,420  
         Proceeds from disposals of permanent assets   16,742     5,591  
         Allowance for probable losses on permanent assets   2,604     481  
         Reversal of allowance for factory shutdown, net of taxes   6,309     -  
         Other   540     274  
 
 (Increase) decrease in current assets:            
     Trade accounts receivable   (47,468 )   7,082  
     Inventories   23,422     21,317  
     Recoverable taxes   (39,871 )   13,664  
     Other   (394 )   (2,467 )
     Prepaid expenses   3,062     1,401  
 
 Increase (decrease) in current liabilities:            
     Trade accounts payable   (9,789 )   (33,982 )
     Payroll and related charges   13,238     (19,663 )
     Taxes payable   9,387     3,123  
     Income and social contribution taxes   698     1,530  
     Other   (10,145 )   1,087  
 
 (Increase) decrease in long-term assets:            
     Recoverable taxes   (979 )   (662 )
     Escrow deposits   211     (2,284 )
     Trade accounts receivable   (145 )   (4,032 )
     Other   (779 )   132  
     Prepaid expenses   (103 )   (2,434 )
 
 Increase (decrease) in long-term liabilities:            
     Other taxes   (14,536 )   2,062  
     Other   (633 )   32  
   
   
 
 Net cash provided by operating activities   325,445     364,311  
   
   
 

33






Ultrapar Participações S.A. and Subsidiaries

    09/30/2006     09/30/2005  
   
   
 
Cash flows from investing activities:            
 Cash investments in long-term, net of redemption   (7,193 )   (294,597 )
 Additions to property, plant and equipment   (166,420 )   (122,248 )
 Additions to deferred charges   (58,886 )   (40,555 )
 Proceeds from sales of permanent assets   13,071     3,699  
 Acquisition of minority interest   (28 )   (7 )
 Acquisition of treasury shares   (1,124 )   -  
   
   
 
             
Net cash provided by (used in) investing activities   (220,580 )   (453,708 )
   
   
 
             
Cash flows from financing activities:            
 Loans, financing and debentures:            
     Issuances   295,495     818,094  
     Amortization   (438,099 )   (562,848 )
 Dividends paid   (149,913 )   (129,320 )
 Related companies   (1,983 )   (5,833 )
 Capital increase due to secondary public offering   -     47,218  

 
 
Net cash provided by (used in) financing activities   (294,500 )   167,311  
   
   
 
             
Decrease (increase) in cash and banks and temporary cash            
 investments   (189,635 )   77,914  
   
   
 
             
Cash and banks and temporary cash investments at the beginning            
 of the period   1,250,924     558,379  
Cash and banks and temporary cash investments at the end of the            
 period   1,061,289     636,293  
 
Supplemental disclosure of cash flow information:            
 Interest paid on loans and financing   74,466     47,808  
 Income and social contribution taxes paid in the period   24,002     18,751  

34






Ultrapar Participações S.A. and Subsidiaries

OTHER INFORMATION CONSIDERED MATERIAL BY THE COMPANY

Shares directly or indirectly owned by the controlling shareholders, members of the Board of Directors, Executive Officers and members of the Fiscal Council as of September 30, 2006

    Common   Preferred   Total







Controlling Shareholders   33,748,059   885,979   34,634,038
Board of Directors¹   46   6   52
Officers²   -   139,950   139,950
Fiscal Council   -   1,071   1,071








Note:   ¹Shares owned by members of the Board of Directors which were not included in Controlling Shareholders' position.
     Should the member not be part of the controlling group, only its direct ownership is included.
    ²Shares owned by Officers which were not included in Controlling Shareholders' and Board of Directors' positions

Shares directly or indirectly owned by the controlling shareholders, members of the Board of Directors, Executive Officers and members of the Fiscal Council - Last 12 Months

        Sep-30-06           Sep-30-05    










    Common   Preferred   Total   Common   Preferred   Total













Controlling Shareholders   33,748,059   885,979   34,634,038   33,748,059   885,979   34,634,038
Board of Directors¹   46   6   52   46   6   52
Officers²   -   139,950   139,950   -   129,950   129,950
Fiscal Council   -   1,071   1,071   -   1,071   1,071













Note:   ¹Shares which were not included in Controlling Shareholders' position
    ²Shares which were not included in Controlling Shareholders' and Board of Directors' positions

Total free float and its percentage of total shares as of September 30, 2006

    Common     Preferred     Total  










Total Shares   49,429,897     31,895,512     81,325,409  
 
 ( - ) Shares held in treasury   6,617     213,497     220,114  
 ( - ) Shares owned by Controlling Shareholders   33,748,059     885,979     34,634,038  
 ( - ) Shares owned by Management   46     139,956     140,002  
 ( - ) Shares owned by affiliates*   -     55,200     55,200  
                   










 
Free-float   15,675,175     30,600,880     46,276,055  
 
% Free-float / Total Shares   31.71 %   95.94 %   56.90 %











35






Ultrapar Participações S.A. and Subsidiaries

The Company’s shareholders that holds more than 5% of voting or non-voting capital, up to the individual level, and breakdown of their shareholdings as of September 30, 2006




















ULTRAPAR PARTICIPAÇÕES S.A   Common     %     Preferred     %     Total     %  



















Ultra S.A. Participações   32,646,696     66.04 %   12     0.00 %   32,646,708     40.14 %
Parth Investments Company¹   9,311,730     18.84 %   1,396,759     4.38 %   10,708,489     13.17 %
Monteiro Aranha S.A.²   5,212,637     10.55 %   703,588     2.21 %   5,916,225     7.27 %
Shares held in treasury   6,617     0.01 %   213,497     0.67 %   220,114     0.27 %
Dodge & Cox, Inc.³   -     -     6,819,785     21.38 %   6,819,785     8.39 %
Others   2,252,217     4.56 %   22,761,871     71.36 %   25,014,088     30.76 %



















TOTAL   49,429,897     100.00 %   31,895,512     100.00 %   81,325,409     100.00 %








¹Company headquartered outside of Brazil
²Public listed company
³Company headquartered outside of Brazil, position according to last available data as at January 2006
 



















ULTRA S.A. PARTICIPAÇÕES   Common     %     Preferred     %     Total     %  



















Paulo Guilherme Aguiar Cunha   11,974,109     18.95 %   -     -     11,974,109     13.52 %
Ana Maria Villela Igel   3,663,669     5.80 %   3,186,410     12.57 %   6,850,079     7.74 %
Christy Participações Ltda.   6,425,199     10.17 %   4,990,444     19.69 %   11,415,643     12.89 %
Rogério Igel   7,953,538     12.58 %   3,917,200     15.46 %   11,870,738     13.41 %
Joyce Igel de Castro Andrade   8,401,501     13.29 %   4,365,161     17.22 %   12,766,662     14.42 %
Márcia Igel Joppert   8,401,501     13.29 %   4,365,161     17.22 %   12,766,662     14.42 %
Fábio Igel   7,437,724     11.77 %   4,070,447     16.06 %   11,508,171     13.00 %
Lucio de Castro Andrade Filho   3,775,470     5.97 %   -     -     3,775,470     4.26 %
Others   5,169,337     8.18 %   448,063     1.78 %   5,617,400     6.34 %



















TOTAL   63,202,048     100.00 %   25,342,886     100.00 %   88,544,934     100.00 %








 
 







                       
CHRISTY PARTICIPAÇÕES LTDA.   Capital Stock     %                          







Maria da Conceição Coutinho Beltrão   3,066     34.90 %                        
Hélio Marcos Coutinho Beltrão   1,906     21.70 %                        
Cristiana Coutinho Beltrão   1,906     21.70 %                        
Maria Coutinho Beltrão   1,906     21.70 %                        







                       
TOTAL   8,784     100.00 %                        







                       

36






ULTRAPAR PARTICIPAÇÕES S.A. AND SUBSIDIARIES
 
INVESTMENTS IN SUBSIDIARIES AND/OR AFFILIATES



1 - Item   2 - Company name   3 - Corporate
taxpayer number
(CNPJ)
  4 - Classification   5 - % of
ownership
interest in
investee
  6 - % of
investor’s
stockholders’
equity
  7 - Type of company   8 - Number of
shares held in
the current quarter
(in thousands)
  9 - Number of
shares held in
the prior quarter
(in thousands)

 
 
 
 
 
 
 
 
01 Ultracargo - Operações Logísticas e 34.266.973/0001-99 Closely-held subsidiary 100.00 30.58 Commercial, industrial and other 2,461 2,461
      Participações Ltda.              
02 Ultragaz Participações Ltda. 57.651.960/0001-39 Closely-held subsidiary 100.00 17.94 Commercial, industrial and other 4,336 4,336
03 Imaven Imóveis e Agropecuária Ltda. 61.604.112/0001-46 Closely-held subsidiary 100.00 2.52 Commercial, industrial and other 27,734 27,734
04 Oxiteno S.A. - Indústria e Comércio 62.545.686/0001-53 Closely-held subsidiary 100.00 70.31 Commercial, industrial and other 35,102 35,102
05 Oxiteno Nordeste S.A. - Indústria e 14.109.664/0001-06 Investee of subsidiary/affiliated 99.36 56.71 Commercial, industrial and other 6,232 6,232
      Comércio   company          
06 Terminal Químico de Aratu S.A. - 14.688.220/0001-64 Investee of subsidiary/affiliated 99.43 6.21 Commercial, industrial and other 12,539 12,539
      Tequimar   company          
07 Transultra - Armazenamento e Transporte 60.959.889/0001-60 Investee of subsidiary/affiliated 100.00 3.58 Commercial, industrial and other 34,999 34,999
      Especializado Ltda.   company          
08 Companhia Ultragaz S.A. 61.602.199/0001-12 Investee of subsidiary/affiliated company 98.55 22.63 Commercial, industrial and other 799,820 799,784
09 SPGás Distribuidora de Gás Ltda. 65.828.550/0001-49 Investee of subsidiary/affiliated company 100.00 4.31 Commercial, industrial and other 1,314 1,314
10 Bahiana Distribuidora de Gás Ltda. 46.395.687/0001-02 Investee of subsidiary/affiliated company 100.00 6.76 Commercial, industrial and other 24 24
11 Utingás Armazenadora S.A. 61.916.920/0001-49 Investee of subsidiary/affiliated company 55.99 1.47 Commercial, industrial and other 2,751 2,751
12 Canamex Químicos S.A. de C.V. - Investee of subsidiary/affiliated company 100.00 1.56 Commercial, industrial and other 122,048 122,048

Note: This information is an integral part of the interim financial statements as required by the CVM.

37






ULTRAPAR PARTICIPAÇÕES S.A. AND SUBSIDIARIES
 
CHARACTERISTICS OF DEBENTURES


1   - ITEM 01
2   - ORDER NUMBER SINGLE
3   - REGISTRATION NUMBER IN THE CVM CVM/SRE/DEB/2005/015
4   - REGISTRATION DATE 04/06/2005
5   - SERIES ISSUED UN
6   - ISSUE TYPE SINGLE
7   - ISSUE NATURE PUBLIC
8   - ISSUE DATE 03/01/2005
9   - MATURITY DATE 03/01/2008
10   - DEBENTURE TYPE NO PREFERENCE
11   - YIELD 102.5% of the CDI
12   - PREMIUM/DISCOUNT  
13   - PAR VALUE (REAIS) 10,000.00
14   - ISSUED AMOUNT (IN THOUSANDS OF REAIS) 303,075
15   - ISSUED SECURITIES (UNIT) 30,000
16   - OUTSTANDING SECURITIES (UNIT) 30,000
17   - SECURITIES HELD IN TREASURY (UNIT) 0
18   - REDEEMED SECURITIES (UNIT) 0
19   - CONVERTED SECURITIES (UNIT) 0
20   - UNPLACED SECURITIES (UNIT) 0
21   - LAST RESET DATE  
22   - NEXT EVENT DATE 03/01/2007
         


38





ULTRAPAR PARTICIPAÇÕES S.A.

MD&A – ANALYSIS OF CONSOLIDATED EARNINGS
Third Quarter 2006

(1) Key Indicators - Consolidated

   
(R$ million)   3Q06     3Q05     2Q06     Change
3Q06
vs.
3Q05
    Change
3Q06
vs.
2Q06
    9M06     9M05     Change
9M06 vs.
9M05
 

Net sales and services   1,295.2     1,229.3     1,197.4     5 %   8 %   3,590.3     3,568.3     1 %
                                                 
Cost of sales and services   (1,029.9 )   (1,009.7 )   (960.7 )   2 %   7 %   (2,889.3 )   (2,838.9 )   2 %
                                                 
Gross Profit   265.3     219.6     236.7     21 %   12 %   701.0     729.4     (4 %)
Selling, general and administrative   (154.1 )   (141.0 )   (147.3 )   9 %   5 %   (441.8 )   (409.9 )   8 %
expenses                                                
Other operating income (expense), net   0.7     0.5     0.5     40 %   40 %   1.8     1.0     80 %
                                                 
Income from operations before   111.9     79.1     89.9     41 %   24 %   261.0     320.5     (19 %)
financial items                                                
Financial (expense) income, net   (2.9 )   (2.7 )   22.4     7 %   (113 %)   31.9     (28.2 )   213 %
Equity in subsidiaries and affiliated   0.1     (0.1 )   0.6     200 %   (83 %)   0.7     1.3     (46 %)
companies                                                
Nonoperating income (expense), net   (7.7 )   (0.7 )   (11.1 )   1.000 %   (31 %)   (20.9 )   (3.2 )   553 %
                                                 
Income before taxes and social                                                
contribution   101.4     75.6     101.8     34 %   0 %   272.7     290.4     (6 %)
Income and social contribution taxes   (26.6 )   (22.7 )   (31.9 )   17 %   (17 %)   (81.5 )   (85.2 )   (4 %)
Benefit of tax holidays   15.3     15.3     19.4     0 %   (21 %)   46.1     54.7     (16 %)
Minority interest   (1.3 )   (1.0 )   (1.2 )   30 %   8 %   (3.6 )   (2.4 )   50 %
                                                 
Net income   88.8     67.2     88.1     32 %   1 %   233.7     257.5     (9 %)
                                                 
EBITDA   158.2     126.8     136.0     25 %   16 %   400.8     459.5     (13 %)
                                                 
Volume – LPG sales   408     409     393     (1 %)   4 %   1,156     1,153     0 %
Volume – Chemicals sales   149     148     134     1 %   11 %   413     404     2 %

(2) Performance Analysis:

Net Sales and Services - Ultrapar's net consolidated sales and services in 3Q06 amounted to R$ 1,295.2 million, up 5% and 8%, on the net sales in 3Q05 and 2Q06, respectively. In the first nine months of this year, Ultrapar's net sales and services amounted to R$ 3,590.3 million, up 1% on the same period in 2005.

Ultragaz: The Brazilian LPG market in 3Q06 was practically unchanged compared to the same period in 2005, with the continuing improvement in the Brazilian population disposable income being offset by the anticipation of demand buildup in 2Q06, as a result of the uncertainties related to the natural gas supply from Bolivia. Compared to 2Q06, the market experienced a 3% growth, due to the seasonally stronger sales in 3Q06. For the first nine months

39






of this year, market growth amounted to 1%. Ultragaz's sales volume in the bottled gas segment amounted to 281,000 tons, flat compared to 3Q05 and in line with market performance. In the bulk segment, there was a drop of 1,500 tons in the volume sold, due to the loss of a large industrial client in 2Q06. Ultragaz’s total sales volume in 3Q06 amounted to 408,000 tons, down 0.5% on 3Q05 – slightly lower than the performance of the market, as a result of the loss of the above mentioned industrial client. Compared to 2Q06, Ultragaz's sales volume was up 4%, basically due to the seasonal difference between the two periods. In the first nine months of this year, Ultragaz’s sales volume totaled 1,156,000 tons, stable compared to the same period in 2005. Net sales and services at Ultragaz amounted to R$ 817.0 million in 3Q06, up 6% on the figure in 3Q05, principally as a result of the benefits arising from the company's distribution structure review and the improved sales mix in the bulk segment. Compared to 2Q06, there was a 5% increase, basically as a result of the seasonal increase in sales volume. In 9M06 Ultragaz’s net sales amounted to R$ 2,292.3 million, up 5% on the same period in 2005.

Oxiteno: Total sales volume in 3Q06 amounted to 149,000 tons, up 1% on 3Q05. Despite the modest growth in total sales volume, specific market initiatives taken by Oxiteno and the improved performance in certain segments of the economy resulted in expansion of 8% in the domestic market, generating a better geographical sales mix as well as an improved product mix. Sales volume in the domestic market totaled 109,000 tons, with the improvements spread across the various segments served by Oxiteno, however with particular emphasis on the building and agrochemical sectors. In the international market, the volume sold was 14% lower than in 3Q05, due to the reduced availability of products as a result of the increased sales in the domestic market. Compared to 2Q06, Oxiteno recorded an 11% increase in total volume, due to the seasonally stronger sales and the market initiatives, which resulted in sales growth in 3Q06 in the domestic market. In the first nine months of this year, accumulated sales volume amounted to 413,000 tons, up 2% on the volume sold in 9M05, with volume expanding by 7% in the domestic market and retracting by 8% in the international market. Oxiteno reported net sales and services of R$ 434.6 million in 3Q06, up 6% compared to 3Q05, due principally to (i) a better sales mix, with an increased proportion of specialty chemicals and sales to the domestic market, as a percentage of the total volume, (ii) the improvement in the international price of glycols, resulting from delays in the startup of new plants in the Middle-East and (iii) extraordinary revenues of R$ 3.3 million. In comparison with 2Q06, net sales and services were up 17%, basically as a result of a seasonal increase in sales volume. In the first nine months of this year, net sales and services amounted to R$ 1,162.4 million, down 7% on 9M05, basically as a result of the appreciation in the Brazilian Real between the two periods.

Ultracargo: Average storage volumes at Ultracargo in 3Q06, measured in cubic meters, were 9% higher than in 3Q05, and up 5% on 2Q06, basically due to the expansion in operations at the Santos Terminal, inaugurated in July 2005. In the transport segment, total kilometrage traveled was down 26% and 12% compared to 3Q05 and 2Q06, respectively, as a result of the decision to discontinue certain operations that had a lower aggregate value. In the first nine months of this year, Ultracargo's average storage volume measured in cubic meters was up 10% compared to the same period in 2005, while average kilometrage traveled was down 14%. Ultracargo reported net sales and services of R$ 55.3 million in 3Q06, down 10% and 6% compared to 3Q05 and 2Q06, respectively. Despite the increase in sales due to the increased volume handled at the Santos Terminal, there was a reduction in transport sales, due to the lower kilometrage traveled in 3Q06. In the first nine months of this year, Ultracargo's net sales and services amounted to R$ 172.1 million, almost unchanged on the same period a year earlier.

Cost of Sales and Services: Ultrapar’s cost of sales and services amounted to R$ 1,029.9 million in 3Q06, up 2% and 7% on 3Q05 and 2Q06, respectively. For 9M06, Ultrapar's cost of sales and services amounted to R$ 2,889.3 million, a 2% increase compared to the same period in 2005.

Ultragaz: Ultragaz’s cost of sales and services amounted to R$ 673.3 million in 3Q06. Despite the salary increase as a result of the annual collective wage agreements, this figure remained practically unchanged as a result of the slight drop in volume and cost reduction initiatives associated with the company's distribution structure review, so minimizing the effects of the increased personnel costs. Compared to 2Q06, the cost of sales and services was up by 3%, due basically to the 4% increase in volume sold. In the first nine months of this year, the company's cost of sales and services amounted to R$ 1,919.2 million, up 2% on the same period in 2005.

Oxiteno: The cost of sales and services at Oxiteno amounted to R$ 332.7 million, up 8% on 3Q05, basically as a function of (i) a 21% increase in the unit cost of ethylene in dollar terms and (ii) the increased volume of specialty chemicals, raising the cost of other raw materials, partially offset by the 7% appreciation in the Real. Compared to 2Q06, there was an increase of 17% in the company's cost of sales and services due to an 11% rise in volume sold, added to the 14% increase in the unit cost of ethylene in dollar terms. The cost of sales and services at Oxiteno over the first nine months of this year amounted to R$ 896.7 million, 2% higher than in the same period in 2005.

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Ultracargo: The cost of services provided by Ultracargo amounted to R$ 35.6 million in 3Q06, down 11% and 2% compared to 3Q05 and 2Q06, respectively, due to a drop in costs in the transport segment because of the lower kilometrage traveled, partially offset by the cost increase related to the expansion in storage operations. In the first nine months of this year, the company's total cost of services provided was down 3% on the same period in 2005.

Gross Profit: Ultrapar reported gross profit of 265.3 million in 3Q06, 21% and 12% above the figures reported in 3Q05 and 2Q06, respectively. The year-to-date gross profit totaled R$ 701.0 million, a 4% decrease in relation to the same period in 2005.

Selling, General and Administrative Expenses: Ultrapar's sales, general and administrative expenses amounted to R$ 154.1 million, up 9% and 5% compared to 3Q05 and 2Q06, respectively. For the first nine months of this year, sales, general and administrative expenses amounted to R$ 441.8 million, an increase of 8% compared to the same period in 2005.

Ultragaz – Sales, general and administrative expenses at Ultragaz totaled R$ 82.7 million in 3Q06, up 13% on 3Q05, basically as a result of (i) salary increases arising from annual collective wage agreements and (ii) a higher level of variable remuneration, in line with the improvement in earnings. Compared to 2Q06, sales, general and administrative expenses were up 4%, basically because of higher sales expenses due to the 4% increase in volume sold, as well as higher variable remuneration expenses. For the first nine months of this year, sales, general administrative expenses totaled 236.3 million, 9% higher than in the same period in 2005.

Oxiteno – Sales, general and administrative expenses at Oxiteno totaled R$ 55.1 million in 3Q06, up 5% and 7% on 3Q05 and 2Q06, respectively. Administrative expenses amounted to R$ 30.9 million, up 14% and 7% on 3Q05 and 2Q06, respectively, basically due to: (i) R$ 1.8 million in extraordinary expenses and (ii) increased personnel expenses compared to 3Q05, as a result of salary adjustments arising from the annual collective wage agreement. Sales expenses were down 6% on 3Q05, due to the reduction seen in international freight expenses, because of the lower exports. In relation to 2Q06, there was an 8% increase in sales expenses, basically due to the 11% rise in volume sold - partially offset by the lower proportion of exports, as a percentage of total volume. For the first nine months of the year, sales, general and administrative expenses were 1% higher than in the same period in 2005.

Ultracargo – Ultracargo's sales, general and administrative expenses totaled R$ 17.5 million in 3Q06, up 5% compared to 3Q05, as a result of the rise in administrative expenses, due to (i) the increase in personnel expenses, largely because of the salary adjustments arising from the annual collective wage agreements; and (ii) the extraordinary expenses of discontinuing certain less profitable operations. Compared to 2Q06, SG&A expenses saw a slight drop of 1%. For the nine months ended in September 2006, Ultracargo's sales, general and administrative expenses amounted to R$ 53.6 million, 22% up on the same period in 2005.

Income from Operations before Financial Items: Ultrapar reported income from operations before financial items of R$ 111.9 million in 3Q06, 41% higher than the operating income reported in 3Q05. Compared to 2Q06, Ultrapar’s income from operations before financial items increased by 24%. Income from operations before financial items totaled R$ 261.0 million in 9M06, down 19% 9M05.

Financial Income (Expenses), Net: Ultrapar's financial result in 3Q06 amounted to expenses of R$ 2.9 million, practically unchanged on 3Q05.

Nonoperating Income (Expenses), Net: In 3Q06 Ultrapar reported nonoperating expenses, net, of R$ 7.7 million. The year-to-date nonoperating expenses, net, totaled R$ 20.9 million, basically composed by R$ 13.1 million of project analyses and R$ 12.0 million (R$ 4.0 million in 9M05) from the sale of permanent assets and provision for losses on sale of real state property.

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Income and Social Contribution: Ultrapar’s 3Q06 income and social contribution taxes expenses amounted to R$ 26.6 million, a 17% increase compared to 3Q05, due to the recovery in the company’s earnings, partially offset by the reduction in undeductable expenses. Compared to 2Q06, Ultrapar’s income and social contribution taxes expenses were 17% lower, also as a result of the reduction in undeductable expenses. The income and social contribution taxes expenses in 9M06 were 4% lower than the figure in 9M05.

Benefit of Tax Holidays: Ultrapar is entitle to federal tax benefits for its activities in the Northeast Region of Brazil, due to the federal program for development of that region. Tax benefits cover Oxiteno’s plant in Camaçari, Bahiana Distribuidora de Gás and Tequimar. Ultrapar's operations generated R$ 15.3 million in benefits of tax holidays in 3Q06, practically unchanged compared to the figure in 3Q05. The benefits of tax holidays totaled to R$ 46.1 million in 9M06, 16% lower than the amount in 9M05.

Net Income: The Company's consolidated net income in 3Q06 amounted to R$ 88.8 million, up 32% on 3Q05 and flat in relation to 2Q06. Despite the improvement in the operational results, in 2Q06 there was a positive non-recurring item of R$ 27 million in the financial result, related to the winning of a lawsuit against the federal tax authorities related to the payment of PIS and COFINS taxes. Excluding this non-recurring item, Ultrapar’s net income was 45% higher compared to 2Q06. For the first nine months of the year, net income amounted to R$ 233.7 million, down 9% on the net income reported in the same period in 2005.

EBITDA: Ultrapar reported consolidated Earnings Before Interest, Depreciation and Amortization (EBITDA) of R$ 158.2 million in 3Q06, up 25% and 16% on 3Q05 and 2Q06, respectively. EBITDA accumulated in the first nine months of 2006 amounted to R$ 400.8 million, 13% down on the same period in 2005.

Ultragaz – Ultragaz reported EBITDA of R$ 89.2 million in 3Q06, up 68% on 3Q05 - as a result of the benefits arising from the company's distribution structure review. Compared to 2Q06, EBITDA was up 15%, also reflecting seasonally stronger sales in 3Q06. In the first nine months of this year, Ultragaz's EBITDA amounted to R$ 222.1 million, 38% higher than in the same period in 2005.

Oxiteno – EBITDA at Oxiteno totaled R$ 58.8 million in 3Q06, practically unchanged on 3Q05. Market initiatives and a better performance in some segments of the market resulted in gains in market share and an improved sales mix - both in geographical as well as product terms, neutralizing the negative effects of the appreciation in the Brazilian Real and the behavior in the price of ethylene. Compared to 2Q06, EBITDA was up 27%, principally due to the higher seasonal sales in the domestic market and the improved price of glycol in the international market. EBITDA for the first nine months of this year totaled R$ 145.5 million, down 44% compared to the same period in 2005.

Ultracargo – Ultracargo reported EBITDA of R$ 8.7 million, down 30% and 20%, compared to 3Q05 and 2Q06, respectively. Despite increased operations at TIS, extraordinary expenses arising from the discontinuation of some transport operations negatively impacted Ultracargo's EBITDA in 3Q06. In the first nine months of this year Ultracargo's EBTIDA amounted to R$ 28.9 million, 20% lower than the EBITDA for the same period in 2005.

EBITDA

R$ million 3Q06 3Q05 2Q06 Change
3Q06 X
3Q05
Change
3Q06 X
2Q06
9M06 9M05 Change 9M06 X 9M05
Ultrapar 158.2 126.8 136.0 25% 16% 400.8 459.5 (13 %)
Ultragaz 89.2 53.1 77.6 68% 15% 222.1 160.7 38%
Oxiteno 58.8 59.6 46.2 (1%) 27% 145.5 258.0 (44 %)
Ultracargo 8.7 12.5 10.9 (30%) (20%) 28.9 36.3 (20%)

We hereby inform that, in accordance with the requirements of CVM Resolution 381/03, our independent auditors Deloitte Touche Tohmatsu Auditores Independentes have not performed during this first nine months of 2006 any service other than the external audit of the financial statements of Ultrapar and affiliated companies and subsidiaries. We also inform that there is no expectation, for the current year, for Deloitte to perform any other service amounting to more than 5% of the auditing cost.

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Item 2

ULTRAPAR PARTICIPAÇÕES S.A.
 
Publicly Listed Company

CNPJ nº 33.256.439/0001- 39   NIRE 35.300.109.724

MINUTES OF A MEETING OF THE BOARD OF DIRECTORS (08/2006)

Date, Time and Place:

November 8, 2006 at 2:30 p.m. at Company Headquarters, located at Av. Brigadeiro Luiz Antônio, Nº 1343 - 9º floor, in the City and State of São Paulo.

Present:

Members of the Board of Directors, whose signatures appear below and member of the Fiscal Council, Flávio César Maia Luz.

Matters discussed:

1. The performance of the Company in the third quarter of the current year was examined and discussed, and the respective financial statements approved.
   
2. The Members of the Board approved the calendar for meetings of the Board of Directors for 2007, as listed in the attached annex.
   
3. In accordance with the recommendation of the Company’s Fiscal Council/Audit Committee, the Members of the Board approved the nomination of KPMG Auditores Independentes (KPMG independent auditors), for the providing of external auditing services for the year 2007.





(Minutes of the meeting of the Board of Directors of Ultrapar Participações S.A., of November 8, 2006)

4. To approve the nomination of the executives to be included in the Company's Restricted Stock Plan, which grants the benefit of shares issued by the Company.

Observation: (i) these deliberations were approved by all those members present, except for Board Member Renato Ochman, who abstained from voting.

There being no further business to discuss, the meeting was closed and the minutes of this meeting being hereby set out, read and approved by all the undersigned members present.

Paulo Guilherme Aguiar Cunha Lucio de Castro Andrade Filho
 Chairman Vice chairman

 
 
Ana Maria Levy Villela Igel – Board Member
 
 
 
Paulo Vieira Belotti – Board Member






Renato Ochman – Board Member
 
 
 
(Minutes of the meeting of the Board of Directors of Ultrapar Participações S.A., of November 8, 2006)
 
 
 
 
Nildemar Secches – Board Member
 
 
 
Flavio César Maia Luz – Member of the Fiscal Council






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

    ULTRAPAR HOLDINGS INC.
Date: November 9, 2006      
       
    By: /s/ Fábio Schvartsman
     
      Name: Fábio Schvartsman
      Title: Chief Financial and Investor Relations Officer
         
(3rd quarter 2006 Financials, November 8, 2006 / Minutes of a meeting of the Board of Directors, November 8, 2006)