ITRJun 11 CVMingles

(Convenience Translation into English from the Original Previously Issued in Portuguese)
Klabin S.A. and Subsidiaries

Individual and Consolidated Interim Financial Information for the Quarter Ended June 30, 2011 and Report on Review of Interim Financial Information
Deloitte Touche Tohmatsu Auditores Independentes
OPINIONS AND DECLARATIONS/INDEPENDENT ACCOUNTANTS REVIEW REPORT (Convenience Translation into English from the Original Previously Issued in Portuguese) REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION To the Board of Directors and Shareholders of Klabin S.A. So Paulo - SP Introduction We have reviewed the accompanying individual and consolidated interim financial information of Klabin S.A. (the Company) and its subsidiaries, included in the Interim Financial Information Form (ITR), for the quarter ended June 30, 2011, which comprises the balance sheet and the related income statement, statement of comprehensive income, statement of changes in equity, and statement of cash flows for the quarter and six-month period then ended, including the selected explanatory notes. Management is responsible for the preparation of the individual interim financial information in accordance with CPC 21 - Interim Financial Reporting and the consolidated interim financial information in accordance with CPC 21 and IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board (IASB), as well as for the presentation of such information in accordance with the standards issued by the Brazilian Securities Commission (CVM), applicable to the preparation of Interim Financial Information (ITR). Our responsibility is to express a conclusion on this interim financial information based on our review. Scope of review We conducted our review in accordance with Brazilian and international standards on review of interim financial information (NBC TR 2410 and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the standards on auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion on the individual interim financial information Based on our review, nothing has come to our attention that causes us to believe that the accompanying individual interim financial information included in the ITR referred to above is not prepared, in all material respects, in accordance with CPC 21 applicable to the preparation of Interim Financial Information (ITR) and presented in accordance with the standards issued by the Brazilian Securities Commission. 2
2011 Deloitte Touche Tohmatsu. All rights reserved.
Deloitte Touche Tohmatsu
Conclusion on the consolidated interim financial information Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated interim financial information included in the ITR referred to above is not prepared, in all material respects, in accordance with CPC 21 and IAS 34 applicable to the preparation of Interim Financial Information (ITR) and presented in accordance with the standards issued by the Brazilian Securities Commission. Emphasis of matter As described in Note 2, the individual financial statements have been prepared in accordance with accounting practices adopted in Brazil. In the case of Klabin S.A., these practices differ from IFRSs, applicable to the individual financial statements, only with respect to the valuation of investments in subsidiaries under the equity method of accounting, while for IFRS purposes these investments would be measured at cost or fair value. Other matters Interim statements of value added We have also reviewed the individual and consolidated interim statements of value added (DVA), for the six-month period ended June 30, 2011, the presentation of which is required by the standards issued by the Brazilian Securities Commission (CVM) applicable to the preparation of Interim Financial Information (ITR), and is considered as supplemental information for IFRS that does not require the presentation of DVA. These statements were subject to the same review procedures described above and, based on our review, nothing has come to our attention that causes us to believe that they are not prepared, in all material respects, in relation to the individual and consolidated interim financial information taken as a whole. The accompanying interim financial information has been translated into English for the convenience of readers outside Brazil. So Paulo, July 28, 2011
DELOITTE TOUCHE TOHMATSU Auditores Independentes
Gilberto Grandolpho Engagement Partner
2011 Deloitte Touche Tohmatsu. All rights reserved.
ITR - Quarterly Information - 06/30/2011 - KLABIN S.A.
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Table of Contents
Company Information
Capital Composition Proceeds in Cash 5 6
Individual Financial Statements

Assets Balance Sheet Liabilities Balance Sheet Income Statement Statement of Comprehensive Income Cash Flow Statement Statement of Changes in Shareholders Equity DMPL - from 01/01/2011 to 06/30/2011 DMPL - from 01/01/2010 to 06/30/2010 Statement of Added Value 12 13 14 7 8 9 10 11
Consolidated Financial Statements

Assets Balance Sheet Liabilities Balance Sheet Income Statement Statement of Comprehensive Income Cash Flow Statement Statement of Changes in Shareholders Equity DMPL - from 01/01/2011 to 06/30/2011 DMPL - from 01/01/2010 to 06/30/2010 Statement of Added Value Notes to the Interim Financial Statements Other Information Relevant to the Company 20 21 22 23 58 15 16 17 18 19
Opinions and Declarations

Independent Accountants Review Report 63
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Company Information / Capital Composition

Number of Shares (Units)
Paid-in Capital Common Preferred Total Treasury Common Preferred Total
Current Quarter 06/30/2011

316,827,563 600,855,733 917,683,296 0 27,196,800 27,196,800
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Company Information / Proceeds in Cash

Event Shareholders' Meeting Shareholders' Meeting Board of Directors Meeting Board of Directors Meeting Approval 04/04/2011 04/04/2011 06/21/2011 06/21/2011 Proceeds Dividend Dividend Interim Dividend Interim Dividend Beginning of Payment 04/20/2011 04/20/2011 07/15/2011 07/15/2011 Share Common Preferred Common Preferred Class of Share Earnings per Share (Reais / Share) 0.07385 0.08124 0.08651 0.09516
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Individual Financial Statements / Assets Balance Sheet (Thousands of Reais)

Account Code 1 1.01 1.01.01 1.01.02 1.01.02.01 1.01.02.01.02 1.01.03 1.01.03.01 1.01.03.01.01 1.01.03.01.02 1.01.03.02 1.01.03.02.01 1.01.04 1.01.06 1.01.06.01 1.01.07 1.01.07.01 1.01.07.02 1.01.08 1.01.08.03 1.02 1.02.01 1.02.01.05 1.02.01.08 1.02.01.08.02 1.02.01.08.04 1.02.01.09 1.02.01.09.03 1.02.01.09.04 1.02.01.09.05 1.02.02 1.02.02.01 1.02.02.01.02 1.02.02.01.04 1.02.03 1.02.03.01 1.02.03.03 1.02.04 1.02.04.01 Account Description Total Assets Current Assets Cash and Cash Equivalents Short-term Investments Short-term Investments through Fair Value Securities Available for Sale Receivables Customers Trade Accounts Receivable Allowance for Doubtful Accounts Other Receivables Related Parties Inventories Recoverable Taxes Current Tax Recoverable Prepaid Expenses Prepaid Expenses - Third Parties Prepaid Expenses - Related Parties Other Current Assets Others Noncurrent Assets Long-term Assets Biological Assets Receivables - Related Parties Other receivables with Subsidiaries Other receivables with Related Parties Other Noncurrent Assets Recoverable Taxes Escrow Deposits Other Noncurrent Assets Investments Equity Investments Investments in Subsidiaries Other Investments Property, Plant and Equipment Property, Plant and Equipment in Operation Property and Equipment in Progress Intangible Assets Intangible Assets Current Quarter 06/30/2011 11,557,621 3,927,743 2,324,891 209,180 209,180 209,180 809,833 581,202 613,413 -32,211 228,631 228,631 440,021 104,381 104,381 18,143 6,400 11,743 21,294 21,294 7,629,878 1,793,417 1,397,633 9,505 8,459 1,046 386,279 147,481 95,918 142,880 1,885,470 1,885,470 1,873,928 11,542 3,943,792 3,780,282 163,510 7,199 7,199 Prior Year 12/31/2010 11,433,668 3,944,351 2,268,816 198,222 198,222 198,222 879,397 566,799 597,488 -30,689 312,598 312,598 427,231 125,974 125,974 22,946 9,704 13,242 21,765 21,765 7,489,317 1,743,814 1,394,938 5,216 3,996 1,220 343,660 131,621 89,388 122,651 1,805,500 1,805,500 1,793,958 11,542 3,932,348 3,754,297 178,051 7,655 7,655
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Individual Financial Statements / Liabilities Balance Sheet (Thousands of Reais)

Account Code 2 2.01 2.01.01 2.01.02 2.01.03 2.01.04 2.01.05 2.01.05.01 2.01.05.01.02 2.01.05.01.04 2.01.05.02 2.01.05.02.01 2.01.05.02.04 2.01.05.02.05 2.02 2.02.01 2.02.02 2.02.02.02 2.02.03 2.02.03.01 2.02.04 2.02.04.01 2.03 2.03.01 2.03.02 2.03.03 2.03.04 2.03.04.01 2.03.04.02 2.03.04.04 2.03.04.08 2.03.04.09 2.03.05 2.03.06 2.03.06.01 2.03.07 Account Description Total Liabilities and Shareholders Equity Current Liabilities Salaries, vacation and payroll charges Trade Accounts Payable Taxes, Charges and Contributions Payable Loans and Financing Other Payables Related Parties Liabilities Debits with Subsidiaries Debits with Other Related Parties Others Dividends and Interest on Capital Payable Accounts Payable - REFIS Other Accounts Payable and Provisions Noncurrent Liabilities Loans and Financing Other Payables Other Deferred Income Deferred Income Tax and Social Contribution Reserves Reserve for Tax, Social Security, Civil and Labor Contingencies Shareholders Equity Capital Capital Reserves Revaluation Reserves Earnings Reserves Legal Statutory Unrealized Proposed Dividends Treasury shares Retained Earnings/Accumulated Losses Valuation Adjustments to Equity Deemed Cost of Property, Plant and Equipment (land) Accumulated Translation Adjustments Current Quarter 06/30/2011 11,557,621 1,841,107 87,053 240,170 55,830 861,011 597,043 31,447 28,935 2,512 565,596 81,998 433,313 50,285 4,574,483 3,717,987 57,383 57,383 695,092 695,092 104,021 104,021 5,142,031 1,5000,000 84,491 51,047 2,204,765 187,656 924,649 1,220,813 -128,353 221,704 1,098,205 1,098,205 -18,181 Prior Year 12/31/2010 11,433,668 1,617,882 92,612 265,137 36,677 805,215 418,241 21,864 19,472 2,392 396,377 349,340 47,037 4,821,701 4,014,976 59,669 59,669 644,909 644,909 102,147 102,147 4,994,085 1,500,000 84,491 51,404 2,274,767 187,656 924,649 1,220,813 70,002 -128,353 1,098,205 1,098,205 -14,782
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Individual Financial Statements / Income Statement (Thousands of Reais)

Account Code 3.01 3.02 3.02.01 3.02.02 3.03 3.04 3.04.01 3.04.02 3.04.04 3.04.05 3.04.06 3.05 3.06 3.06.01 3.06.02 3.07 3.08 3.08.01 3.08.02 3.09 3.11 3.99 3.99.01 3.99.01.01 3.99.01.02 3.99.02 3.99.02.01 3.99.02.02 Current Quarter Account Description 04/01/2011 to 06/302011 Revenues from Sales of Goods and/or Services 921,875 Cost of Goods and/or Services Sold -702,780 Change in Fair Value of Biological Assets 68,079 Cost of Sales -700,859 Gross Profit 219,095 Operating Expenses/Income -74,405 Selling -61,170 General and Administrative -55,459 Other Operating Income Other Operating Expenses -6,434 Equity in Subsidiaries 48,658 Income from Operations Before Income Taxes and Financial Income 144,690 Financial Results 67,412 Financial Income 70,122 Financial Expenses -2,710 Income before Income Taxes 212,102 Income Tax and Social Contribution -48,959 Current -19,305 Deferred -29,654 Net Income from Continuing Operations 163,143 Income/Loss for the period 163,143 Earnings per Share - (Reais / Share) Basic Earnings per Share ON 0.17220 PN 0.18930 Diluted Earnings per Share ON 0.17220 PN 0.18930 Accumulated Current Year 01/01/2011 to 06/30/2011 1,850,753 -1,394,957 83,072 -1,478,029 455,796 -143,744 -126,200 -109,139 -11,183 102,778 312,052 96,508 128,046 -31,538 408,560 -105,215 -54,850 -50,365 303,345 303,345 Same Quarter in Prior Year 04/01/2010 to 06/30/2010 870,451 -645,702 31,370 -677,072 224,749 -84,738 -58,499 -53,548 6,220 21,089 140,011 -46,290 57,376 -103,666 93,721 -26,377 -13,897 -12,480 67,344 67,344 Accumulated Prior Year 01/01/2010 to 06/30/2010 1,702,313 -1,267,308 62,079 -1,329,387 435,005 -161,116 -114,488 -98,686 9,033 43,025 273,889 -126,839 103,182 -230,021 147,050 -38,123 -19,541 -18,582 108,927 108,927
0.32010 0.35200 0.32010 0.35200
0.07020 0.07720 0.07020 0.07720
0.11360 0.12490 0.11360 0.12490
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Individual Financial Statements / Statement of Comprehensive Income (Thousands of Reais)

Account Code 4.01 4.02 4.02.01 4.03 Account Description Net Income for the Period Other Comprehensive Income Foreign Currency Translation Adjustments Comprehensive Income CurrentQuarter 04/01/2011 to 06/30/2011 163,143 -2,055 -2,055 161,088 Accumulated Current Year 01/01/2011 to 06/30/2011 303,345 -3,399 -3,399 299,946 Same Quarter in Prior Year 04/01/2010 to 06/30/2010 67,344 -67 -67 67,277 Accumulated Prior Year 01/01/2010 to 06/30/2010 108,927 8 8 108,935
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Individual Financial Statements / Cash Flow Statement - Indirect Method (Thousands of Reais)
Account Code 6.01 6.01.01 6.01.01.01 6.01.01.02 6.01.01.03 6.01.01.04 6.01.01.05 6.01.01.06 6.01.01.07 6.01.01.08 6.01.01.09 6.01.01.10 6.01.01.11 6.01.01.12 6.01.02 6.01.02.01 6.01.02.02 6.01.02.03 6.01.02.04 6.01.02.05 6.01.02.06 6.01.02.07 6.01.02.08 6.01.02.09 6.01.02.10 6.02 6.02.01 6.02.02 6.02.03 6.02.04 6.02.05 6.03 6.03.01 6.03.02 6.03.03 6.05 6.05.01 6.05.02 Account Description Cash Flow from Operating Activities Cash Flow Provided by Operations Net income for the Period Depreciation and Amortization Changes in Fair Value of Biological Assets Biological Assets Depletion Deferred Income Tax and Social Contribution Interest and Exchange Variation on Loans and Financing Payment of Interest on Loans and Financing Interest Provision - REFIS Equity in Subsidiaries Income Received from Subsidiaries Income and Social Contribution Taxes Paid Others Changes in Assets and Liabilities Trade Accounts Receivable Inventories Recoverable Taxes Securities Available for Sale Prepaid Expenses Other Assets Trade Accounts Payable Taxes, Charges and Contributions Payable Salaries, Vacation and Payroll Charges Other Liabilities Cash Flow from Investing Activities Purchase of Property, Plant and Equipment (Net tax) Cost of planting Biological Assets (Net tax) Sale of Property, Plant and Equipment Investments Acquisition and Payment of Capital in Subsidiaries Others Cash Flow from Financing Activities Loans and Financing Repayment of Loans Dividends Paid Increase (Decrease) in Cash and Cash Equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at the end of the period Accumulated Current Year Accumulated Prior Year 01/01/2011 to 06/30/2011 01/01/2010 to 06/30/2010 359,805 380,007 277,220 357,657 303,345 108,927 115,737 107,310 -83,072 -62,079 113,917 120,243 50,365 18,582 -59,156 -127,327 74,048 -102,778 23,544 -42,933 11,530 82,585 68,042 -12,790 64,893 -10,958 4,803 -30,577 -24,967 19,153 -5,559 10,545 -179,018 -143,539 -33,540 2,199 -4,138 -124,712 214,398 -269,108 -70,002 56,075 2,268,816 2,324,891 204,045 -154,458 5,360 -43,025 62,676 -6,015 -3,909 22,350 -221,544 12,385 103,202 21,541 -611 -2,948 125,992 26,232 3,590 -45,489 -118,419 -93,920 -22,069 633 -3,063 -12,285 430,347 -385,630 -57,002 249,303 1,697,278 1,946,581
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Individual Financial Statements / Statement of Changes in Shareholders Equity / 01/01/2011 to 06/30/2011 (Thousands of Reais)
Account Code 5.01 5.03 5.04 5.04.06 5.05 5.05.01 5.05.02 5.05.02.04 5.06 5.06.02 5.06.03 5.07 Capital Reserves, Granted Options and Treasury Shares 84,491 84,491 84,491 Earnings Reserve 2,326,171 2,326,171 -70,002 -70,002 -357 -540 183 2,255,812 Retained Earnings -81,998 -81,998 303,345 303,345 357 540 -183 221,704 Other Comprehensive Income 1,083,423 1,083,423 -3,399 -3,399 -3,399 1,080,024 Shareholders' Equity 4,994,085 4,994,085 -152,000 -152,000 299,946 303,345 -3,399 -3,399 5,142,031
Account Description Opening Balance Adjusted Opening Balance Capital Transaction with Shareholders Dividends Total Comprehensive Income Net Income for the Period Other Comprehensive Income Foreign Currency Translation Adjustments Internal Changes in Shareholders Equity Realization of Revaluation Reserve Income Tax on Realization of Revaluation Reserve Closing Balance
Capital 1,500,000 1,500,000 1,500,000
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Individual Financial Statements / Statement of Changes in Shareholders Equity / 01/01/2010 to 06/30/2010 (Thousands of Reais)
Account Code 5.01 5.03 5.04 5.04.06 5.05 5.05.01 5.05.02 5.05.02.04 5.06 5.06.02 5.06.03 5.06.04 5.06.05 5.06.06 5.06.07 5.07 Capital Reserves, GrantedOptions and Treasury Shares 84,491 84,491 84,491 Earnings Reserve 1,973,331 1,973,331 -57,002 -57,002 -37,761 -539 183 -74,609 -79,320 40,972 75,552 1,878,568 Retained Earnings 108,927 108,927 37,761 539 -183 74,609 79,320 -40,972 -75,552 146,688 Other Comprehensive Income 1,104,337 1,104,337 8 8 8 1,104,345 Shareholders' Equity 4,662,159 4,662,159 -57,002 -57,002 108,935 108,927 8 8 4,714,092
Account Description Opening Balance Adjusted Opening Balance Capital Transaction with Shareholders Dividends Total Comprehensive Income Net Income for the Period Other Comprehensive Income Foreign Currency Translation Adjustment Internal Changes in Shareholders Equity Realization of Revaluation Reserve Income Tax on Realization of Revaluation Reserve Realization of Unrealized Earnings Reserve - Biological Assets Realization of Unrealized Earnings Reserve - Biological Assets (Subsidiaries) Transfer of Unrealized Income to Unrealized Earnings Reserve - Biological Assets Transfer of Unrealized Income to Unrealized Earnings Reserve - Biological Assets (Subsidiaries) Closing Balance
Capital 1,500,000 1,500,000 1,500,000
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Individual Financial Statements / Statement of Value Added (Thousands of Reais)

Account Code 7.01 7.01.01 7.01.02 7.01.02.01 7.01.02.02 7.01.04 7.02 7.02.01 7.02.02 7.03 7.04 7.04.01 7.05 7.06 7.06.01 7.06.02 7.07 7.08 7.08.01 7.08.01.01 7.08.01.02 7.08.01.03 7.08.02 7.08.02.01 7.08.02.02 7.08.02.03 7.08.03 7.08.03.01 7.08.04 7.08.04.02 7.08.04.03 Account Description Revenue Sales of Goods, Products and Services Other Income Changes in Fair Value of Biological Assets Others Recognition/Reversal of Allowance for Doubtful Accounts Inputs Purchased from Third Parties Cost of Products, Goods and Services Sold Supplies, Power, Outside Services and Other Gross Value Added Retentions Depreciation, Amortization and Depletion Net Value Added Created Value Added Received in Transfer Equity in Subsidiaries Financial Income Total Value Added for Distribution Value Added Distribution Employees and Labor Charges Direct Compensation Benefits Severance Pay Fund - F.G.T.S. Taxes, Charges and Contributions Federal State Municipal Third Parties Capital Compensation Interest Shareholders Capital Compensation Dividends Retained Earnings / Loss for the Period Accumulated Current Year Accumulated Prior Year 01/01/2011 to 06/30/2011 01/01/2010 to 06/30/2010 2,417,998 2,210,175 2,331,206 2,147,249 85,271 62,712 83,072 62,079 2,199 633 1,521 -1,552,177 -606,351 -945,826 865,821 -229,654 -229,654 636,167 428,734 102,778 325,956 1,064,901 1,064,901 247,359 185,064 46,176 16,119 284,749 250,805 31,076 2,868 229,448 229,448 303,345 81,998 221,347 214 -1,369,271 -559,874 -809,397 840,904 -227,553 -227,553 613,351 146,207 43,025 103,182 759,558 759,558 213,963 163,872 36,328 13,763 206,647 163,095 40,643 2,909 230,021 230,021 108,927 108,927
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Consolidated Financial Statements / Assets Balance Sheet (Thousands of Reais)

Account Code 1 1.01 1.01.01 1.01.02 1.01.02.01 1.01.02.01.02 1.01.03 1.01.03.01 1.01.03.01.01 1.01.03.01.02 1.01.04 1.01.06 1.01.06.01 1.01.07 1.01.07.01 1.01.07.02 1.01.08 1.01.08.03 1.02 1.02.01 1.02.01.05 1.02.01.08 1.02.01.08.04 1.02.01.09 1.02.01.09.03 1.02.01.09.04 1.02.01.09.05 1.02.02 1.02.02.02 1.02.03 1.02.03.01 1.02.03.03 1.02.04 1.02.04.01 Account Description Total Assets Current Assets Cash and Cash Equivalents Short-term Investments Short-term Investments through Fair Value Securities Available for Sale Receivables Customers Trade Accounts Receivable Allowance for Doubtful Accounts Inventories Recoverable Taxes Current Tax Recoverable Prepaid Expenses Prepaid Expenses - Third Parties Prepaid Expenses - Related Parties Other Current Assets Others Noncurrent Assets Long-term Assets Biological Assets Receivables with Related Parties Other Receivables with Related Parties Other Noncurrent Assets Recoverable Taxes Escrow Deposits Other Noncurrent Assets Investments Investment Property Property, Plant and Equipment Property, Plant and Equipment in Operation Property and Equipment in Progress Intangible Intangibles Current Quarter 06/30/2011 12,383,757 4,071,892 2,482,050 209,180 209,180 209,180 761,492 761,492 793,771 -32,279 462,546 108,068 108,068 21,498 9,755 11,743 27,058 27,058 8,311,865 3,275,144 2,880,325 1,046 1,046 393,773 147,481 97,279 149,013 11,542 11,542 5,017,980 4,854,469 163,511 7,199 7,199 Prior Year 12/31/2010 12,261,243 4,127,147 2,531,105 198,222 198,222 198,222 753,961 753,961 784,725 -30,764 460,128 131,102 131,102 27,498 14,256 13,242 25,131 25,131 8,134,096 3,110,876 2,762,879 1,220 1,220 346,777 131,621 90,698 124,458 11,542 11,542 5,004,023 4,825,971 178,052 7,655 7,655
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Consolidated Financial Statements / Liabilities Balance Sheet (Thousands of Reais)

Account Code 2 2.01 2.01.01 2.01.02 2.01.03 2.01.04 2.01.05 2.01.05.01 2.01.05.01.04 2.01.05.02 2.01.05.02.01 2.01.05.02.04 2.01.05.02.05 2.02 2.02.01 2.02.02 2.02.03 2.02.03.01 2.02.04 2.02.04.01 2.03 2.03.01 2.03.02 2.03.03 2.03.04 2.03.04.01 2.03.04.02 2.03.04.04 2.03.04.08 2.03.04.09 2.03.05 2.03.06 2.03.06.01 2.03.07 2.03.09 Account Description Total Liabilities Current Liabilities Salaries, Vacation and Payroll Charges Trade Accounts Payable Taxes, Charges and Contribuitions Payable Loans and Financing Other Payables Liabilities with Related Parties Debits with Other Related Parties Others Dividends and Interest on Capital Payable Accounts Payable - REFIS Other Accounts Payable and Provisions Noncurrent Liabilities Loans and Financing Other Payables Deferred Income Deferred Income Tax and Social Contribution Reserves Reserve for Tax, Social Security, Civil and Labor Contingencies Consolidated Shareholders Equity Capital Capital Reserves Revaluation Reserves Earnings Reserves Legal Statutory Unrealized Proposed Dividends Treasury Shares Retained Earnings/Accumulated Losses Valuation Adjustments to Equity Deemed Cost of Property, Plant and Equipment (Land) Accumulated Translation Adjustments Shareholders Equity Attributable to Noncontrolling Interests Current Quarter 06/30/2011 12,383,757 1,853,435 88,053 243,767 80,152 865,989 575,474 2,512 2,512 572,962 81,998 433,313 57,651 5,201,149 3,717,987 60,639 1,318,502 1,318,502 104,021 104,021 5,329,173 1,500,000 84,491 51,404 2,204,765 187,656 924,649 1,220,813 -128,353 221,704 1,098,205 1,098,205 -18,181 187,142 Prior Year 12/31/2010 12,261,243 1,690,913 93,542 269,839 77,682 842,121 407,729 2,392 2,392 405,337 349,340 55,997 5,415,828 4,014,976 63,070 1,235,635 1,235,635 102,147 102,147 5,154,502 1,500,000 84,491 51,404 2,274,767 187,656 924,649 1,220,813 70,002 -128,353 1,098,205 1,098,205 -14,782 160,417
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Consolidated Financial Statements / Income Statement (Thousands of Reais)

Account Code 3.01 3.02 3.02.01 3.02.02 3.03 3.04 3.04.01 3.04.02 3.04.04 3.04.05 3.05 3.06 3.06.01 3.06.02 3.07 3.08 3.08.01 3.08.02 3.09 3.11 3.11.01 3.11.02 3.99 3.99.01 3.99.01.01 3.99.01.02 3.99.02 3.99.02.01 3.99.02.02 Account Description Revenue from Sales and/or Services Cost of Goods and/or Services Sold Change in Fair Value of Biological Assets Cost of Sales Gross Profit Operating Expenses/Income Selling General and Administrative Other Operating Income Other Operating Expenses Income from Operations before Income Taxes and Financial Income Financial Results Financial Income Financial Expenses Income before Income Taxes Income Tax and Social Contribution Current Deferred Net Income from Continuing Operations Income/Loss for the period Attributed to Owners of the Company Attributed to Noncontrolling Interests Earnings per Share - (Reais / Share) Basic Earnings per Share ON PN Diluted Earnings per Share ON PN Current Quarter 04/01/2011 to 06/30/2011 947,447 -627,620 145,084 -772,704 319,827 -142,970 -76,652 -56,715 -9,603 176,857 69,475 72,573 -3,098 246,332 -76,956 -35,760 -41,196 169,376 169,376 163,143 6,233 Accumulated Current Year 01/01/2011 to 06/30/2011 1,904,452 -1,231,147 252,891 -1,484,038 673,305 -293,185 -162,402 -112,056 -18,727 380,120 103,033 132,845 -29,812 483,153 -164,798 -86,477 -78,321 318,355 318,355 303,345 15,010 Same Quarter in Prior Year 04/01/2010 to 06/30/2010 905,399 -627,743 89,029 -716,772 277,656 -123,372 -72,726 -54,906 4,260 154,284 -45,725 58,803 -104,528 108,559 -37,094 -23,762 -13,332 71,465 71,465 67,344 4,121 Accumulated Prior Year 01/01/2010 to 06/30/2010 1,749,784 -1,205,625 176,552 -1,382,177 544,159 -241,406 -145,291 -100,840 4,725 302,753 -126,311 105,901 -232,212 176,442 -60,104 -43,154 -16,950 116,338 116,338 108,927 7,411
0.17220 0.18930 0.17220 0.18930
0.32010 0.35200 0.32010 0.35200
0.07020 0.07720 0.07020 0.07720
0.11360 0.12490 0.11360 0.12490
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Consolidated Financial Statements / Statement of Comprehensive Income (Thousands of Reais)

Account Code 4.01 4.02 4.02.01 4.03 4.03.01 4.03.02 Account Description Consolidated Net Income for the Period Other Comprehensive Income Foreign Currency Translation Adjustments Consolidated Comprehensive Income for the Period Attributed to Owners of the Company Attributed to Noncontrolling Interests Current Quarter Accumulated Current Year 04/01/2011 to 06/30/2011 01/01/2011 to 06/30/2011 169,376 318,355 -2,055 -3,399 -2,055 -3,399 167,321 314,956 161,088 299,946 6,233 15,010 Same Quarter in Prior Year 04/01/2010 to 06/30/2010 71,465 -67 -67 71,398 67,277 4,121 Accumulated Prior Year 01/01/2010 to 06/30/2010 116,338 8 8 116,346 108,935 7,411
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Consolidated Financial Statements / Cash Flow Statement - Indirect Method (Thousands of Reais)
Account Code 6.01 6.01.01 6.01.01.01 6.01.01.02 6.01.01.03 6.01.01.04 6.01.01.05 6.01.01.06 6.01.01.07 6.01.01.08 6.01.01.09 6.01.01.10 6.01.01.11 6.01.02 6.01.02.01 6.01.02.02 6.01.02.03 6.01.02.04 6.01.02.05 6.01.02.06 6.01.02.07 6.01.02.08 6.01.02.09 6.01.02.10 6.02 6.02.01 6.02.02 6.02.03 6.02.04 6.03 6.03.01 6.03.02 6.03.03 6.03.04 6.03.05 6.03.06 6.05 6.05.01 6.05.02 Account Description Cash Flow from Operating Activities Cash Flow Provided by Operations Net Income for the Period (Attributed to Owners of the Company) Depreciation and Amortization Changes in Fair Value of Biological Assets Biological Assets Depletion Deferred Income Tax and Social Contribution Interests and Exchange Variation on Loans and Financing Payment of Interests on Loans and Financing Accounts Payable REFIS Net Income for the Period (Attributed to Noncontrolling Interests) Income Tax and Social Contribution Paid Others Changes in Assets and Liabilities Trade Accounts Receivable Inventories Recoverable Taxes Securities Available for Sale Prepaid Expenses Other Assets Trade Accounts Payable Taxes, Charges and Contributions Payable Salaries, Vacation and Payroll Charges Other Payables Cash Flow from Investing Activities Purchase of Property, Plant and Equipment (Net Tax) Cost of Planting Biological Assets (Net tax) Sale of Property, Plant and Equipment Others Cash Flow from Financing Activities Loans and Financing Repayment of Loans and Financing Capital Contribution in Subsidiaries by Noncontrolling Shareholders Acquisition of Noncontrolling Interests in Subsidiaries Dividends Paid Dividends Paid to Noncontrolling Shareholders Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents at Beginning of the Period Cash and Cash Equivalents at the End of the Period Accumulated Current Year Accumulated Prior Year 01/01/2011 to 06/30/2011 01/01/2010 to 06/30/2010 302,066 464,172 275,174 350,077 303,345 116,320 -252,891 196,204 78,321 -59,198 -127,710 74,048 15,010 -82,550 14,275 26,892 -9,046 -2,418 105,951 -10,958 6,000 -32,889 -26,072 2,470 -5,489 -657 -206,621 -148,061 -60,759 2,199 -144,500 214,398 -300,611 12,652 -894 -70,002 -43 -49,055 2,531,105 2,482,050 108,927 107,621 -176,551 244,447 16,950 205,449 -155,273 5,359 7,411 -10,258 -4,005 114,095 -82,079 2,019 100,875 21,541 -1,348 2,003 60,929 51,051 3,767 -44,663 -142,620 -93,000 -45,776 633 -4,477 18,595 445,615 -391,197 23,564 -2,385 -57,002 340,147 1,841,652 2,181,799
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Consolidated Financial Statements / Statement of Changes in Shareholders Equity / 01/01/2011 to 06/30/2011 (Thousands of Reais)
Account Code 5.01 5.03 5.04 5.04.06 5.04.08 5.04.09 5.04.10 5.05 5.05.01 5.05.02 5.05.02.04 5.06 5.06.02 5.06.03 5.07 Capital Reserves, Granted Options and Capital Treasury Shares 1,500,000 84,491 1,500,000 84,491 1,500,000 84,491 Earnings Reserve 2,326,171 2,326,171 -70,002 -70,002 -357 -540 183 2,255,812 Retained Earnings Other Consolidated Comprehensive Shareholders' Noncontrolling Shareholders' Income Equity Interests Equity 1,083,423 4,994,085 160,417 5,154,502 1,083,423 4,994,085 160,417 5,154,502 -3,399 -3,399 -3,399 1,080,024 -152,000 -152,000 299,946 303,345 -3,399 -3,399 5,142,031 11,715 12,652 -894 -43 15,010 15,010 187,142 -140,285 -152,000 12,652 -894 -43 314,956 318,355 -3,399 -3,399 5,329,173
Account Description Opening Balance Adjusted Opening Balance Capital Transactions with Shareholders Dividends Capital Contribution in Subsidiaries by Noncontrolling Shareholders Acquisition of Noncontrolling Interests in Subsidiaries Dividend to Noncontrolling Shareholders Total Comprehensive Income Net Income for the Period Other Comprehensive Income Foreign Currency Translation Adjustments Internal Changes in Shareholders Equity Realization of Revaluation Reserve Income Tax on Realization of Revaluation Reserve Closing Balance
-81,998 -81,998 303,345 303,345 357 540 -183 221,704
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Consolidated Financial Statements / Statement of Changes in Shareholders Equity / 01/01/2010 to 06/30/2010 (Thousands of Reais)
Account Code 5.01 5.03 5.04 5.04.06 5.04.08 5.04.09 5.05 5.05.01 5.05.02 5.05.02.04 Capital Reserves, Granted Options and Capital Treasury Shares 1,500,000 84,491 1,500,000 84,491 Earnings Reserve 1,973,331 1,973,331 -57,002 -57,002 -37,761 -539 183 -153,929 Retained Earnings Other Consolidated Comprehensive Shareholders' Noncontrolling Shareholders' Income Equity Interests Equity 1,104,337 4,662,159 56,665 4,718,824 1,104,337 4,662,159 56,665 4,718,824 108,927 108,927 37,761 539 -183 153,929 8 8 8 -57,002 -57,002 108,935 108,927 8 8 21,179 23,564 -2,385 7,411 7,411 -35,823 -57,002 23,564 -2,385 116,346 116,338 8 8 -
5.06 5.06.02 5.06.03 5.06.04 5.06.05
5.07
Account Description Opening Balance Adjusted Opening Balance Capital Transactions with Shareholders Dividends Capital Contribution in Subsidiaries by Noncontrolling Shareholders Acquisition of Noncontrolling Interests in Subsidiaries Total Comprehensive Income Net income for the Period Other Comprehensive Income Foreign Currency Translation Adjustments Internal Changes in Shareholders Equity Realization of Revaluation Reserve Income Tax on Realization of Revaluation Reserve Realization of Unrealized Earnings Reserve - Biological Assets Transfer of Unrealized Income to Unrealized Earnings Reserve Biological Assets Closing Balance
1,500,000
84,491
116,524 1,878,568
-116,524 146,688
1,104,345
4,714,092
85,255
4,799,347
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Consolidated Financial Statements / Statement of Value Added (Thousands of Reais)

Account Code 7.01 7.01.01 7.01.02 7.01.02.01 7.01.02.02 7.01.04 7.02 7.02.01 7.02.02 7.03 7.04 7.04.01 7.05 7.06 7.06.02 7.07 7.08 7.08.01 7.08.01.01 7.08.01.02 7.08.01.03 7.08.02 7.08.02.01 7.08.02.02 7.08.02.03 7.08.03 7.08.03.01 7.08.04 7.08.04.02 7.08.04.03 7.08.04.04 Account Description Revenue Sales of Goods, Products and Services Other Income Change in Fair Value of Biological Assets Others Recognition/Reversal of Allowance for Doubtful Accounts Inputs Purchased from Third Parties Cost of Products, Goods and Services Sold Supplies, Power, Outside Services and Other Gross Value Added Retentions Depreciation, Amortization and Depletion Net Value Added Created Value Added Received in Transfer Financial Income Total Value Added for Distribution Value Added Distribution Employees and Labor Charges Direct Compensation Benefits Severance Pay Fund - F.G.T.S. Taxes, Charges and Contributions Federal State Municipal Third Parties Capital Compensation Interest Shareholders Capital Compensation Dividends Retained Earnings / Loss for the Period Noncontrolling Interest in Retained Earnings Accumulated Current Year Accumulated Prior Year 01/01/2011 to 06/30/2011 01/01/2010 to 06/30/2010 2,648,097 2,380,962 2,391,493 2,203,564 255,090 177,185 252,891 176,552 2,199 633 1,514 -1,524,046 -530,456 -993,590 1,124,051 -312,524 -312,524 811,527 333,842 333,842 1,145,369 1,145,369 251,912 189,423 46,334 16,155 344,293 310,349 31,076 2,868 230,809 230,809 318,355 81,998 221,347 15,010 213 -1,338,033 -476,499 -861,534 1,042,929 -352,068 -352,068 690,861 105,901 105,901 796,762 796,762 217,347 167,097 36,455 13,795 230,865 187,313 40,643 2,909 232,212 232,212 116,338 108,927 7,411
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Klabin S.A. and Subsidiaries
Interim Financial Information for the Three and Six-month Periods Ended June 30, 2011
Deloitte Touche Tohmatsu Auditores Independentes
Version : 1
INDEX TO THE NOTES TO THE INTERIM FINANCIAL STATEMENTS 1 GENERAL INFORMATION 2 BASIS OF PRESENTATION OF THE INTERIM FINANCIAL INFORMATION AND SIGNIFICANT ACCOUNTING PRACTICES 3 CONSOLIDATION OF INTERIM FINANCIAL INFORMATION 4 CASH AND CASH EQUIVALENTS 5 SECURITIES 6 TRADE ACCOUNTS RECEIVABLE 7 RELATED-PARTY TRANSACTIONS 8 INVENTORIES 9 RECOVERABLE TAXES 10 INCOME TAX AND SOCIAL CONTRIBUTION 11 INVESTMENTS IN SUBSIDIARIES 12 PROPERTY, PLANT AND EQUIPMENT 13 BIOLOGICAL ASSETS 14 LOANS AND FINANCING 15 TRADE ACCOUNTS PAYABLE 16 RESERVE FOR TAX, SOCIAL SECURITY, CIVIL AND LABOR CONTINGENCIES 17 SHAREHOLDERS' EQUITY 18 NET REVENUE FROM SALES 19 EXPENSES / REVENUE BY NATURE 20 FINANCIAL INCOME (EXPENSES) 21 EARNINGS PER SHARE 22 OPERATING SEGMENTS 23 RISK MANAGEMENT AND FINANCIAL INSTRUMENTS 24 EMPLOYEE BENEFITS AND PENSION PLAN 25 INSURANCE 26 EVENTS AFTER THE REPORTING PERIOD
Page 25 25 31 32 32 33 34 36 36 37 39 40 42 43 45 46 47 49 49 49 50 51 53 57 57 57
(Amounts in thousands of Brazilian reais, unless otherwise stated) 1 GENERAL INFORMATION
Klabin S.A. (the Company) and its subsidiaries are engaged in the following sectors of the pulp and paper industry to serve the domestic and foreign markets: wood supply, packaging paper, paper sacks, and corrugated cardboard boxes. Their operations are integrated from forestation to production of final products. Klabin is a publicly-held corporation whose shares are traded on So Paulo Stock Exchange (BM&F Bovespa). The Company is domiciled in Brazil and headquartered in So Paulo. The Company also has investments in Special Purposes Entities (SCPs) for the specific purpose of raising funds from third parties to support reforestation projects. The Company, as an ostensible partner, has contributed with forest assets, composed basically of forests and land, by means of the granting of use, while the other investing shareholders have contributed cash to these companies. These SCPs entitle Klabin S.A. a preemptive right to acquire forestry products at market price and conditions. The Company also has ownership interests in other companies (notes 3 and 11), whose operational activities are related to the Companys business objectives.
BASIS OF PRESENTATION OF INTERIM FINANCIAL INFORMATION AND SIGNIFICANT ACCOUNTING PRACTICES
2.1 Basis of presentation of Interim Financial Information The Company presents the individual Interim Financial Information in conformity with CPC 21 Interim Financial Information, issued by the Accounting Pronouncements Committee (CPC) and consolidated Interim Financial Information in conformity with CPC 21 and IAS 34 Interim Financial Reporting, issued by the International Accounting Standards Board IASB and the standards established by the Brazilian Securities and Exchange Commission (CVM). The individual Interim Financial Information (Company) were prepared based on accounting practices adopted in Brazil, which differ from the accounting practices used to prepare the consolidated Interim Financial Information prepared in conformity with IAS 34 only with respect to the valuation of investments in subsidiaries under the equity method, instead of valuation at cost or fair value. 2.2 Summary of significant accounting practices The significant accounting practices adopted by the Company and its subsidiaries can be summarized as follows: a) Functional currency and translation of foreign currencies The Interim Financial Information are presented in Brazilian reais (R$), which is the Company and its subsidiaries functional and presentation currency. (i) Transactions and balances Foreign currency transactions are originally recorded at the exchange rate prevailing on the transaction date. Gains and losses resulting from the difference between the translation of assets and liabilities in foreign currency at the balance sheet date are recognized in the Companys income statement. (ii) Foreign subsidiaries Assets and liabilities of foreign subsidiaries are translated based on the exchange rate of the reporting currency set by the Company at the balance sheet date and the corresponding income statements are translated based on the exchange rate on the transaction dates. Investment translation gains or losses are recognized in the income statement.
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In the subsidiaries classified as independent entities, exchange differences arising from translation are separately recorded in a line item in shareholders' equity under Valuation adjustments to equity (comprehensive income/loss). Upon the sale of a foreign subsidiary, the accumulated deferred amount recognized in shareholders' equity relating to this foreign subsidiary is recognized in the income statement. b) Cash and cash equivalents Comprise cash, banks, and highly liquid short-term investments, immediately convertible into a known cash amount, and subject to an insignificant risk of change in value. c) Financial instruments Originally recognized at fair value plus, transaction costs that are directly attributable to their acquisition or issuance of financial assets or financial liabilities, other than financial assets or financial liabilities at fair value in profit or loss. They are subsequently measured at the balance sheet date based on the classification of financial instruments into the following categories: financial asset measured at fair value through income or loss, held-to-maturity investments, loans and receivables, financial assets available-for-sale; and financial liability measured at fair value through income or loss and others financial liabilities. (i) Securities Securities are available for sale and recorded including financial income (income/loss), which approximate their fair values. (ii) Loans and financing This balance corresponds to the amount of funds raised, plus interest and charges proportional to the period incurred, less installments paid, and includes the exchange rate change on the liability, if applicable. Interest is measured using the effective interest rate method and recorded as financial expenses, as well as the adjustment for inflation and foreign exchange rate on the balance of outstanding loans and financing. d) Trade accounts receivable Stated at the original amounts of trade accounts receivable from sales of products, plus foreign exchange changes, when applicable. The allowance for doubtful accounts is recorded based on an individual analysis of receivables and in an amount considered sufficient by Management to cover possible losses on collection of receivables that can be changed as a result of the recovery of receivables from defaulting customers or change in the customers financial condition. The adjustment to present value of the balance of trade accounts receivable is immaterial due to the short realization period. e) Inventories Inventories are stated at average cost, net of taxes to be offset, when applicable, and at the fair value of biological assets on the cut-off date, which is lower than net realizable values of selling costs. Inventory of finished products comprise processed raw materials and direct labor and production costs on inventory valuation. When necessary, inventories are reduced by the inventory losses provision, which is recognized for inventory devaluation, obsolescence of products and physical inventory loss. In addition, because of the nature of the Companys products, obsolete finished products may be recycled for reuse in production. f) Income tax and social contribution Current and deferred income tax is calculated at the rate of 15%, plus a 10% surtax on taxable income exceeding R$240, and current and deferred social contribution is calculated at the rate of 9% on taxable income. Balances are recorded in the Companys income on the accrual basis. Prevailing tax rates used to determine deferred tax credits are similar to those used for current taxes.
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Deferred income tax and social contribution are recorded in the financial statements at the net amount of noncurrent assets or liabilities, arising basically from temporarily nondeductible provisions and taxes challenged in court, both in the Companys assets and liabilities, deferred foreign exchange changes (Company) and adjustments included in the Transitional Tax Regime (RTT) such as: deemed cost of property, plant and equipment (land), measurement of biological assets at fair value (note 13), changes in depreciation rates of property, plant and equipment (note 12) and amortization of deferred assets. The provision for current income and social contribution taxes is stated in the balance sheet net of tax prepayments made in the year. g) Investments (Company) Represented by investments in subsidiaries and accounted for using the equity method in the Companys balance sheet based on the Companys ownership interest in these companies. The financial statements of the subsidiaries are prepared for the reporting period equivalent to the Companys reporting period. The accounting practices are adjusted to conform to the accounting practices adopted by the Company, when necessary. Intercompany unrealized gains and losses are eliminated for purposes of equity accounting in the Companys balance sheet and consolidation, proportionately to the interest held in the subsidiary. At each balance sheet date, the Company determines whether there is objective evidence that the investment in the subsidiary is impaired. If applicable, the Company calculates the amount of the impairment loss and recognizes it in the income statement. Exchange rate changes on the investment in foreign subsidiaries that cannot be characterized as branches are recognized as valuation adjustments to equity and realized at the time of the respective investment realization. h) Property, plant and equipment Stated at acquisition or construction cost, less taxes to be offset, when applicable, and accumulated depreciation. Additionally, as elected by the Company on the first-time adoption of IFRS, property, plant and equipment was measured at fair value, based on the adoption of the deemed cost of property, plant and equipment. Depreciation is calculated on a straight-line basis taking into consideration the estimated useful lives of the assets, based on the expectation of future economic benefits, except for land, which is not depreciated. The estimated useful lives of the assets is annually reviewed and adjusted, if necessary, and may vary based on the technological modernization of each branch. The useful lives of the Companys assets are stated in note 12. Maintenance costs on the Companys assets are directly recorded in the income statement when realized. Financial charges are capitalized in property, plant and equipment, when incurred on property, plant and equipment in progress, if applicable. i) Impairment of assets Property, plant and equipment and other assets are tested for impairment on an annual basis or whenever significant events or changes in circumstances indicate that their carrying amounts may not be recoverable. When this is the case, recoverable values are calculated to determine if assets are impaired. The recoverable value of an asset corresponds to the greater of the net sales price or value in use of an asset or a cashgenerating unit, which is separately determined for each asset, unless the asset does not result in cash flow separately from other assets or groups of assets. In estimating the value in use, estimated future cash flows are discounted to their present value, using a discount rate that reflects current market estimates of the time value of cash and specific risks inherent in the asset. Impairment losses are recognized in the income statement at the amount by which the carrying amount of an asset exceeds its recoverable amount, which is the higher of net selling price and value in use of an asset.
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j) Biological assets Biological assets correspond to eucalyptus and pine forests, which are used in the production of packaging paper, paper sacks and corrugated cardboard boxes and sales to third parties, when depleted. Harvest and replanting have an approximate cycle of 7 - 14 years, which varies based on the crop and genetic material. Biological assets are measured at fair value, less estimated selling costs at harvest period. Significant assumptions for determining the fair value of biological assets are stated in note 13. The evaluation of biological assets is carried out on a quarterly basis by the Company, and corresponding gains or losses on the changes in fair value of biological assets are recognized in the income statement in the period in which they occur, in a separate line item in the income statement under changes in the fair value of biological assets. The increase or decrease in the fair value is determined based on the difference between the fair values of biological assets at the beginning and end of the current period. The balancing item of the fair value of biological assets, net of deferred taxes, is recorded under unrealized earnings reserve in shareholders' equity. k) Intangible assets Intangible assets are stated at cost less accumulated amortization for the period, calculated on a straight-line basis based on their estimated useful lives. Expenditures on research and development of new products and techniques used by the Company are recorded in the income statement as expenses, when incurred. l) Noncurrent assets and liabilities Comprise assets and receivables and liabilities and payables maturing 12 months after the balance sheet date, plus corresponding charges and adjustment for inflation, if applicable, through the balance sheet date. m) Provisions Provisions are recognized when the Company has a legal or constructive obligation as a result of past events or expected future events, it is probable that an outflow of funds will be required to settle the obligation, and the accrued amount can be reliably measured. Expense on provisions is stated in the income statement, net of any reimbursement. If the time effect of the amount is material, provisions are discounted using a discount rate that reflects the specific risks inherent in the obligation, if applicable. The Company records reserves for tax, social security, civil and labor contingencies, which are accrued when lawsuit are assessed as probable loss by the Companys legal counsel and management. This assessment is performed taking into consideration the nature of lawsuits, outcome of similar lawsuits and the progress of pending litigation. When the Company expects the full or partial reimbursement of a reserve amount, this asset is recognized only when realization is clear and certain, without recognition of assets in uncertain scenarios. n) Net revenue from sales Sales revenue is stated net of taxes, discounts and rebates, and is recognized to the extent that it is probable that economic benefits will be generated and transferred to the Company, upon the transfer of ownership of the products, and when it can be reliably measured based on the fair value of the consideration received, net of discounts, rebates and taxes or charges on sales. o) Employee benefits and pension plan The Company grants to employees, benefits such as life insurance, health care, profit sharing and other benefits recorded on the accrual basis, which are discontinued after the termination of the employment relationship with the Company.
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Additionally, the Company grants a private pension and health care plan to former employees retired until 2001, classified as defined benefit plans. These benefits adopt liability and income/expense recognition practices measured based on the actuarial valuation. Gains and losses on the actuarial valuation of the benefits from changes in actuarial assumptions and commitments are recognized in the income statement. p) Significant accounting judgments, estimates and assumptions In preparing the Interim Financial Information, judgments, estimates and assumptions were used to account for certain assets, liabilities, income and expenses for the period. The accounting judgments, estimates and assumptions adopted by Management were defined by using the best information available up to the date of the Interim Financial Information and the experience of past events, assumptions on future events, and the assistance of experts, when applicable. The Interim Financial Information include, therefore, various estimates, including, but not limited to, the determination of the useful lives of property, plant and equipment, the realization of deferred tax credits, allowance for doubtful accounts, provision for inventory losses, measurement of the fair value of biological assets, reserve for tax, social security, civil and labor contingencies risk, fair value measurement of certain financial instruments and the provision for impairment. Actual results recognized by using accounting judgments, estimates and assumptions, when realized, could differ from those estimates, and the Company may be exposed to significant losses. q) Earnings per share The Company calculates earnings per share based on profit for the year attributed to each class of Company share, weighted by the number of shares outstanding in the period. r) Statement of value added (DVA) The Brazilian corporate law requires the presentation of the statement of value added as an integral part of the set of financial statements presented by the Company. The purpose of this statement is to disclose the economic value added created by the Company and its distribution during a certain reporting period. The statement of value added was prepared pursuant to the provisions of CPC 09 - Statement of Value Added, using information obtained in the same accounting records used to prepare the financial statements.
2.3 New pronouncements, revisions and interpretations
New accounting pronouncements were approved and issued or under approval, as well as reviews of previously issued pronouncements and new interpretations of CPC, during the year 2011. Management is assessing the impact of pronouncements. Listed below are the new and revised standards and interpretations issued or under approval:
Pronouncement CPC 15 (R1) Business Combinations CPC 18 (R1) Investments in Subsidiaries and Associates CPC 19 (R1) Interest in Joint Ventures CPC 20 (R1) Borrowing Costs CPC 21 (R1) Interim Financial Statements CPC 35 (R1) Separate Financial Statements CPC 36 (R2) Consolidated Financial Statements Amendments to IFRS 3 changing its substance. Amendments to IAS 28 changing its substance. Amendments to IAS 31 changing its substance. Amendments to IAS 23 changing its substance. Amendments to IAS 34 changing its substance. Amendments to IAS 27 changing its substance. Amendments to IAS 27 changing its substance. Summary made by IASB and revision of the wording, without made by IASB and revision of the wording, without made by IASB and revision of the wording, without made by IASB and revision of the wording, without made by IASB and revision of the wording, without made by IASB and revision of the wording, without made by IASB and revision of the wording, without
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Pronouncement CPC 44 Combined Financial Statements OCPC6 Presentation of Pro Forma Financial Information IFRS 7 Financial Instruments: Disclosures IAS 1 Presentation of Financial Statements IAS 12 Income Taxes IAS 24 Related Party Disclosures IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments IAS 32 Financial Instruments: Disclosures. IFRS 9 Financial Instruments IFRS 13 Fair Value Measurement IAS 19 Employee Benefits IFRS 10 Consolidated Financial Statements IFRS 11 Joint Arrangement IFRS 12 Disclosure of Interests in Other Entities IFRS 1 Firsttime Adoption of International Financial Reporting Standards IFRIC 14 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
Summary New pronouncement addressing the criteria for preparation and presentation of the combined financial statements of entities under common control or management but that do not represent a legal entity. New instruction addressing criteria for aggregation, preparation and presentation of pro forma financial information, used in corporate restructurings, business acquisitions, disposals or spin-offs. Inclusion of procedures on the disclosure of transfer of financial assets. Amendment to the standard to include new guidelines for the presentation of other comprehensive income (loss). Inclusion of procedures on the recovery of underlying assets when the asset is measured under the IAS 40 fair value framework Inclusion of procedures on related party disclosures. Instruction on the disclosure of liabilities settled by issuing equity instruments to the creditor. Inclusion of procedures on the disclosure of financial instruments held by the entity. New procedure establishing guidelines on the recognition of the fair value of financial instruments. New pronouncement consolidating fair value measurement guidelines, as well as disclosure requirements, without changing the substance of the guidelines included in other pronouncements. Amendment to the standard to include new guidelines on the recognition of actuarial gains or losses. The new pronouncement will replace IAS 27 and propose a single consolidation method where control will be used as a basis for consolidation of any entity. The new pronouncement eliminates the proportionate consolidation model for jointly-controlled entities and maintained the equity method only. New pronouncement establishing requirements for disclosure of unconsolidated entities. Amendment to the pronouncement relating to the limited exemption from comparative disclosures of instruments for entities that are first-time adopters. Amendment to the interpretation relating to the determination of employee benefit limits in IAS 19.
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CONSOLIDATION OF INTERIM FINANCIAL INFORMATION
The subsidiaries are fully consolidated as of the acquisition date of the shareholding control, and continue to be consolidated until the date in which such control ceases. The Interim Financial Information of the subsidiaries are prepared for the same reporting period as the Company, using accounting practices consistent with the practices adopted by the Company. The following criteria are adopted for consolidation purposes: (i) elimination of investments in subsidiaries and equity in subsidiaries; (ii) the profits from intercompany transactions and the assets and liabilities are equally eliminated and (iii) the noncontrolling interest is calculated and disclosed separately. The consolidated Interim Financial Information comprises Klabin S.A. and its subsidiaries as at June 30, 2011 and December 31, 2010, as follows:
Head office Subsidiaries: Klabin Argentina S.A. Klabin Ltd. Klabin Trade Argentina Cayman Islands England United States of America Brazil Brazil Brazil Brazil Brazil Brazil Brazil Activity Industrial sacks Interest in other companies Sale of products in the foreign market Sale of products in the foreign market Hotel services Manufacture of phytotherapic products Forestry Interest in other companies Interest in other companies Reforesting Reforesting Ownership Direct/indirect Direct Indirect Ownership interest (%) 6/30/11 12/31/10 6/30/10 100 100 100 100 100 100 100 100 100
Klabin Forest Products Company IKAP Empreendimentos Ltda. Klabin do Paran Produtos Florestais Ltda. Antas Servios Florestais S/C Ltda. Centaurus Holdings S.A. Timber Holdings S.A. Silent partnerships: Paran Santa Catarina
Direct Direct Direct Direct Direct Direct Direct Direct
100 100 100 100 100 100 89 92
100 100 100 100 100 100 89 94
100 100 100 100 100 100 82 90
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CASH AND CASH EQUIVALENTS
In order to comply with its policy for the use of funds, the Company has maintained its short-term investments in low-risk investments at financial institutions considered by Management as prime banks both in Brazil and abroad, based on the rating disclosed by agencies. The Management has considered those financial assets as cash and cash equivalents due to its immediate liquidity in financial institutions.
Company 12/31/2010 7,117 2,261,028 671 2,268,816 Consolidated 12/31/2010 39,880 2,361,210 130,015 2,531,105
Cash and banks Short-term investments in local currency Short-term investments in foreign currency
06/30/2011 3,281 2,320,979 631 2,324,891
06/30/2011 56,667 2,413,021 12,362 2,482,050
Short-term financial investments in local currency, corresponding to Bank Certificates of Deposit (CDBs), are indexed based on the variation of the interbank deposit rate (CDI), at an annual average rate of 12.34% (10.00% as at December 31, 2010), and investments in foreign currency correspond to Time Deposits in US dollar, with maturity up to 90 days and annual average rate of 0.01% (0.05% as at December 31, 2010). Short-term investments in CDB can be immediately redeemed without interest and have daily liquidity.
SECURITIES
Comprise Brazilian National Treasury Bills (LFTs), whose yield is linked to fluctuations in the SELIC interest rate. The balance for these securities, which Management classified as available-for-sale, was R$209,180 as at June 30, 2011 (R$198,222 as at December 31, 2010). Original maturities are through 2013 However, there is an active market for these securities and their fair value is basically the principal plus the interest originally established therein.
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TRADE ACCOUNTS RECEIVABLE

Company Consolidated 12/31/2010 06/30/2011 12/31/2010 584,443 13,045 597,488 (30,689) 566,799 55,987 9.37% 4,211 8,992 4,321 5,368 33,095 541,501 597,488 602,640 191,131 793,771 (32,279) 761,492 56,012 7.06% 7,812 5,000 7,425 2,575 33,200 737,759 793,771 584,539 200,186 784,725 (30,764) 753,961 80,824 10.30% 4,211 19,596 6,289 14,642 36,086 703,901 784,725
06/30/2011 Trade accounts receivable . Local . Foreign Total trade accounts receivable Allowance for doubtful accounts 602,564 10,849 613,413 (32,211) 581,202 49,884 8.13% 6,194 5,000 4,765 1,440 32,485 563,529 613,413
Past-due % on total portfolio From 4 to 10 days From 11 to 30 days From 31 to 60 days From 61 to 90 days Over 90 days Current Total portfolio
The average collection term of trade receivables is approximately 60 days for domestic market sales and approximately 120 days foreign market sales, and interest is collected after the contractual payment term. As mentioned in note 23, the Company has standards for monitoring credits and past-due trade accounts receivable, and the related risk refers to the possibility of not receiving the amounts resulting from transactions of installment sales. The allowance for doubtful accounts is sufficient by Management to cover possible losses on outstanding trade accounts receivable. Changes in the allowance for doubtful accounts are as follows:
Balance as at December 31, 2009 Current year provision Reversal provision Balance as at December 31, 2010 Current year provision Reversal provision Balance as at June 30, 2011
Company (27,283) (5,141) 1,735 (30,689) (3,990) 2,468 (32,211)
Consolidated (27,537) (5,141) 1,914 (30,764) (5,834) 4,319 (32,279)
The balance of the allowance for doubtful accounts recorded by the Company corresponds mainly to trade accounts receivable past due over 90 days. The expense on the recognition of the allowance for doubtful accounts is recorded in Selling expenses in the income statement.
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RELATED PARTY TRANSACTIONS
a) Balances and transactions with related parties

06/30/2011 Klabin Argentina (i) Type Balances Current assets Noncurrent assets Current liabilities Noncurrent liabilities Transactions Revenue from sales Purchases Interest expenses on borrowings Guarantee commission expense Expenses on royalties (i) (ii) (iii) (iv) (v) (vi) Klabin Trade (i) Silent Silent partnership partnership Paran Sta Catarina (ii) and (v) (ii) and (v) Subsidiary 607 6,713 2,203 20,242 Monteiro Aranha S.A. (iii) Shareholder 377 2,259 Klabin Irmos & Cia. (iii) and (iv) Shareholder 11,743 1,046 1,839 13,061 11,023 12/31/2010 Company 06/30/2010
BNDES (vi) Shareholder 346,709 1,228,340 64,869 -
Other
Total
Total
Total
Subsidiary Subsidiary Subsidiary 7,686 975 218,295 366,411 2,043 22,145 5,472 66,294 -
8,459 373 1,772
240,374 9,505 378,156 1,228,340 375,061 86,536 64,869 13,061 15,054
325,840 5,216 348,606 1,364,978
340,265 72,951 70,057 16,061 13,796
Balance receivable for product sales transactions entered into under usual market prices, terms and conditions, as established by the parties; Purchase of timber made under usual market price, terms and conditions; Licensing for use of brand; Prepaid expense for guarantee commission on balance of BNDES financing due at the rate of 1% semiannually; Supply of seedlings, seeds and services under usual market prices, terms and conditions; Borrowings raised at usual market conditions;
06/30/2011 Monteiro Aranha S.A. (i)

Shareholder
12/31/2010
Consolidated 06/30/2010
Klabin Irmos & Cia. (i), (ii) and (iv)

Shareholder
BNDES (iii)
Shareholder
Outras
Total
Total
Total
Type of relationship Balances Current assets Noncurrent assets Current liabilities Noncurrent liabilities Transactions Interest expenses on borrowings Guarantee commission - expense Expenses on royalties
377 2,259
11,743 1,046 1,839 13,061 11,023
346,709 1,228,340 64,869 -
296 1,772
11,743 1,046 349,221 1,228,340 64,869 13,061 15,054
13,242 1,220 328,853 1,364,978 70,057 16,061 13,796
(i) Licensing for use of brand; (ii) Prepaid expense for guarantee commission on balance of BNDES financing due at the rate of 1% semiannually; (iii) Loans raised under usual market conditions;
b) Management compensation and benefits Management compensation should be established by the Annual Shareholders' Meeting, in accordance with Brazilian corporate law and the Companys bylaws. Accordingly, the Annual Shareholders Meeting held on April 4, 2011 established the overall amount of the annual compensation payable to the Board of Directors and management at up to R$29.7 million in 2011. The compensation approved for 2010 amounted to R$24.6 million. The table below shows the compensation payable to the Board of Directors and Management in the period:
Short-term 06/30/2011 (*) 06/30/2010 Salary and benefits of Board of Directors and Directors Long-term 06/30/2011 06/30/2010 Company and Consolidated Total 06/30/2011 06/30/2010
8,072
10,664
263
192
8,335
10,856
(*) Includes an adjustment of the provision for variable compensation made in 2010.
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Management compensation includes the fees of the Companys Directors, and the fees and variable compensation of the Companys Officers. Long-term benefits relate to contributions made by the Company to the pension plan. Said amounts are mostly recorded in General and Administrative expenses/income. The Company has no stock-based payment.
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INVENTORIES
Company 12/31/2010 104,425 120,304 81,731 6,823 105,556 (2,923) 11,315 427,231 Consolidated 06/30/2011 12/31/2010 135,064 137,900 125,375 129,450 71,454 69,874 5,483 6,823 115,651 106,864 (3,129) (2,923) 12,648 12,140 462,546 460,128
Finished products Raw materials Timber and logs Fuel and lubricants Maintenance supplies Provision for losses Other
06/30/2011 108,776 114,808 88,088 5,483 114,412 (3,129) 11,583 440,021
Raw material inventories include paper rolls transferred from paper to packaging units. The expense on the recognition of the allowance for inventory losses is recorded in the income statement under Cost of sales. For the six-month period ended June 30, 2011, an additional provision for inventory losses in the amount of R$206 was recognized. The Company has no inventories pledged as collateral.
RECOVERABLE TAXES
06/30/2011 Noncurrent assets 64,417 9,355 53,003 20,706 147,481 147,481 12/31/2010 Noncurrent assets 63,480 9,599 53,949 4,593 131,621 131,621
State VAT (ICMS) Tax on revenue (PIS) Tax on revenue (COFINS) Income tax and social contribution Other Subsidiaries Consolidated
Current assets 46,288 3,960 18,209 27,429 8,495 104,381 3,687 108,068
Current assets 57,726 7,654 34,707 17,149 8,738 125,974 5,128 131,102
In view of the expansion plan (MA1100 project, performed over the last years), the Company recorded credits from tax and contributions levied on purchases of property, plant and equipment, as permitted by legislation for future offset against taxes payable of the same nature or other taxes. Based on its budget analyses and projections, the Companys management does not foresee any risks related to the realization of these tax credits. Taxes on revenue (PIS/COFINS) and State VAT (ICMS) shown in the current group are expected to be offset against these same taxes payable for the next 12 months, in accordance with managements projections.
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10
INCOME TAX AND SOCIAL CONTRIBUTION
a) Nature and expected realization of deferred taxes As at June 30, 2011 and December 31, 2010, the effects of deferred tax assets and liabilities are as follows:
Reserve for civil, tax and labor provision Interest from enrollment with REFIS (note 16) Write-off of deferred charges (adoption of RTT) Tax loss carryforwards Temporarily nondeductible provisions Noncurrent assets Deferred exchange rate change (*) Fair value of biological assets Reassessment of useful lives of PP&E (adoption of RTT) Deemed cost of property, plant and equipment Asset revaluation reserve Other temporary differences Noncurrent liabilities Net amount in liability
Company Consolidated 06/30/2011 12/31/2010 06/30/2011 12/31/2010 30,766 29,169 30,766 29,169 67,685 39,134 67,685 39,134 20,695 22,436 20,695 22,436 82 90 36,797 27,429 36,798 27,430 155,943 118,168 156,026 118,259 111,830 53,549 111,830 53,549 334,026 341,394 654,656 628,904 92,600 64,095 92,600 64,095 263,954 263,954 565,742 565,742 26,298 26,481 26,298 26,481 22,327 13,604 23,402 15,123 851,035 763,077 1,474,528 1,353,894 695,092 644,909 1,318,502 1,235,635
(*) Management opted for tax recognition criteria of exchange rate of their rights and obligations based on a cash basis, generating foreign exchange temporary differences, which will be taxed according to the settlement of receivables and payables denominated in foreign currency. The Company adopted the Transitional Tax Regime (RTT) established by Law 11941/09, for the tax treatment of income tax and social contribution on the effects arising from the adoption of accounting pronouncements (CPCs). Management, based on the budget, business plan and budget projection approved by the Board of Directors expects that tax credits derived from temporary differences and tax loss carryforwards will be realized as follows:
2012 2013 2014 2015 2016 and thereafter
Company 84,798 24,846 37,506 2,852 5,941 155,943
06/30/2011 Consolidated 84,798 24,846 37,506 2,852 6,024 156,026
The projected realization may not materialize if the estimates used reflected in the preparation of these financial statements are different when the balances are realized. The Companys information on the taxes challenged in the courts is disclosed in note 16.
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b) Reconciliation of tax expenses in income (loss) The reconciliation of current and deferred income tax and social contribution expenses in the income statements for the sixmonth period ended June 30, 2011 and 2010 are summarized as follows:
06/30/2011 (54,008) (842) (54,850) (29,227) (28,505) 7,367 (50,365) Company 06/30/2010 (19,541) (19,541) (1,830) (34,080) 17,328 (18,582) 06/30/2011 (85,635) (842) (86,477) (24,122) (28,505) (25,694) (78,321) Consolidated 06/30/2010 (43,154) (43,154) (2,139) (34,080) 19,269 (16,950)
Income tax and social contribution expense Prior year adjustment Current income tax and social contribution Tax effects on temporary differences Reassessment of useful lives of PP&E Change in fair value - biological assets (note 13) Deferred income tax and social contribution
c) Reconciliation of income tax and social contribution to the amounts resulting from directly applying related tax rates to corporate results
Company 06/30/2010 147,050 (49,997) Consolidated 06/30/2010 176,442 (59,990)
06/30/2011 Income before income tax and social contribution Income tax and social contribution at the rate of 34% Tax effects on permanent differences: Equity in subsidiaries Other effects Difference in taxation - subsidiaries Income tax and social contribution . Current . Deferred Income tax and social contribution expense in statements of income 408,560 (138,910)
06/30/2011 483,153 (164,272)
34,945 (1,250) (105,215) (54,850) (50,365) (105,215)
14,629 (2,755) (38,123) (19,541) (18,582) (38,123)
474 (1,000) (164,798) (86,477) (78,321) (164,798)
(523) 409 (60,104) (43,154) (16,950) (60,104)
Page 38 of 64
11
INVESTMENTS IN SUBSIDIARIES
Klabin Ltd. (*) Klabin Argentina S.A. Centaurus Holdings S.A. (***) Timber Holdings S.A. Silent Partnership "Paran" Silent Partnership "Santa Catarina"
Other
Total
Balance as of December 31, 2009 Acquisition and capital payment Proceeds Equity in subsidiaries (**) Exchange differences on translating foreign operations Transfers Balance as of December 31, 2010 Acquisition and capital payment Proceeds Equity in subsidiaries (**) Exchange differences on translating foreign operations Balance as of June 30, 2011
4,545 16,007 20,552 7,013 27,565
27,520 6,012 (2,304) 31,228 2,254 (3,399) 30,083
173,531 6,878 (23,836) 156,573 4,138 9,876 170,587
35,991 5 1 35,997 39 36,036
1,121,657 (91,164) 96,369 1,126,862 (13,488) 81,405 1,194,779
408,919 (47,004) 53,884 415,799 (10,056) 1,473 407,216
6,475 (1,753) 30 2,195 6,947 718 (3) 7,662
1,778,638 6,878 (138,168) 146,688 (2,274) 2,196 1,793,958 4,138 (23,544) 102,778 (3,402) 1,873,928
S ummary financial information of subsidiaries in March 31, 2011 Total assets Total liabilities Total shareholders equity Net income (*) Klabin Trades parent company
(**) Includes the effects of changes in and realization of the fair value of biological assets (note 13). (***) Includes fair value recognized on the acquisitions of the Company investments.
27,568 3 27,565 7,384
44,485 13,926 30,559 2,254
148,555 37,392 111,163 9,876
39,507 3,463 36,044 39
1,832,530 475,778 1,356,752 98,398
589,854 140,598 449,256 4,397
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12
PROPERTY, PLANT AND EQUIPMENT
a) Breakdown of property, plant and equipment

06/30/2011 Company Land Buildings and construction M achinery, equipment and fixtures Construction and facilities in progress Other (*) Consolidated Land Buildings and construction M achinery, equipment and fixtures Construction and facilities in progress Other (*) Cost Accumulated depreciation Net 969,022 414,586 2,200,491 163,510 196,183 3,943,792 2,032,784 419,663 2,205,431 163,511 196,591 5,017,980 12/31/2010 Net 970,496 430,396 2,178,068 178,051 175,337 3,932,348 2,030,194 436,041 2,183,993 178,052 175,743 5,004,023
969,022 680,832 4,964,795 163,510

366,379 7,144,538
(266,246) (2,764,304)
(170,196) (3,200,746) -
2,032,784 688,229 4,981,780 163,511

367,895 8,234,199
(268,566) (2,776,349)
(171,304) (3,216,219)
(*) Refer to vehicles, furniture and fixtures and IT equipment.
The information on property, plant and equipment pledged as collateral in transactions conducted by the Company is disclosed in note 14, and information on insurance coverage of assets is disclosed in note 25.
b) Summary of changes in property, plant and equipment:
Company Land 970,465 31 970,496 213 (1,687) 969,022 Buildings and construction 446,791 1,094 (93) (19,345) 1,937 12 430,396 (45) (10,582) 663 (5,846) 414,586 Machinery, equipment and fixtures 2,259,288 3 (2,446) (183,807) 106,713 (1,683) 2,178,068 (730) (95,736) 123,951 (5,062) 2,200,491 Construction and facilities in progress 103,823 183,852 (105,112) (4,512) 178,051 113,400 (127,030) (911) 163,510 Other 124,963 73,782 (181) (16,091) (3,569) (3,567) 175,337 30,139 (2,550) (7,650) 2,203 (1,296) 196,183 Total 3,905,330 258,731 (2,720) (219,243) (9,750) 3,932,348 143,539 (3,325) (113,968) (14,802) 3,943,792
Amount on December 31, 2009 Additions Write-off Depreciation Internal transfers Others Amount on December 31, 2010 Additions Write-off Depreciation Internal transfers Others Amount on June 30, 2011
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Consolidated Land 2,051,557 6,929 (28,197) (37) (58) 2,030,194 4,135 213 (1,758) 2,032,784 Buildings and construction 453,069 1,103 (93) (19,536) 1,937 (439) 436,041 2 (45) (10,696) 663 (6,302) 419,663 Machinery, equipment and fixtures 2,265,898 793 (2,478) (184,736) 106,713 (2,197) 2,183,993 233 (730) (96,133) 123,951 (5,883) 2,205,431 Construction and facilities in progress 103,913 183,852 (105,112) (4,601) 178,052 113,400 (127,030) (911) 163,511 Other 122,455 73,812 (181) (16,278) (3,501) (564) 175,743 30,291 (2,633) (7,722) 2,203 (1,291) 196,591 Total 4,996,892 266,489 (2,752) (220,550) (28,197) (7,859) 5,004,023 148,061 (3,408) (114,551) (16,145) 5,017,980
Amount on December 31, 2009 Additions Write-off Depreciation Reversal of deemed cost Internal transfers Others Amount on December 31, 2010 Additions Write-off Depreciation Internal transfers Others Amount on June 30, 2011
Depreciation for the period was substantially allocated to cost of production. c) Depreciation method The table below shows the annual depreciation rates calculated under the straight-line method, which were applicable to the six-month period ended June 30, 2011 and 2010, defined based on the economic useful lives of assets: Rate - % 2.86 to 3.33 2.86 to 10 (*) 4 to 20
Buildings and construction Machinery, equipment and facilities Other

(*) Prevailing average rate of 6%.
As of December 31, 2010, management conducted a reassessment of the useful lives of the Companys property, plant and equipment, but no adjustments to the depreciation rates used was considered necessary. d) Construction and facilities in progress As at June 30, 2011, the balance of construction and facilities in progress relates to the following major projects: (i) installation of transmission lines of high voltage electricity of the Monte Alegre, (ii) technological upgrading of packaging segment plants, (iii) biomass boiler and refurbishment of the Otaclio Costa unit turbogenerator, and (iv) current investments in continuing operations of the Company. e) Impairment of assets The Company did not identify any indicators that as at June 30, 2011 and December 31, 2010 its assets might be impaired, based on its analysis of discounted cash flows prepared in accordance with the budget plan approved by Management.
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13
BIOLOGICAL ASSETS
The Companys biological assets comprise the planting and growing of pine and eucalyptus trees for the supply of raw material to produce the pulp used in the paper production process and sales of timber to third parties. As at June 30, 2011, the Company had 212 thousand hectare (213 thousand hectare as at December 31, 2010) of planted areas (information not reviewed by independent auditors), not considering the permanent preservation areas and legal reserve to be maintained to comply with the Brazilian environmental law. The balance of the Companys biological assets consists of the cost to grow forests and the fair value difference on the growing cost, less costs necessary to prepare the assets for use or sale in order to the total balance of biological assets is recorded at fair value, as follows:
Historical cost of biological assets Adjustment to fair value of biological assets Fair value
06/30/2011 415,203 982,430 1,397,633
Company 12/31/2010 390,837 1,004,101 1,394,938
06/30/2011 954,867 1,925,458 2,880,325
Consolidated 12/31/2010 913,159 1,849,720 2,762,879
Measurement of biological assets at their fair values takes into consideration certain estimates, such as: wood price, discount rate, forest harvesting planning, and productivity, which are subject to uncertainties, as any variation would have an impact on actual results. The information on assets pledged as collateral in transactions conducted by the Company is disclosed in note 14, and information on insurance coverage of biological assets and financial risks of forestry operations is disclosed in note 25. a) Assumptions for recognition of the fair value of biological assets Under CPC 29 (IAS 41) - Biological Assets and Agricultural Product, the Company recognizes its biological assets at fair value in accordance with the following assumptions: (i) Eucalyptus forests are recorded at historical cost through their third year and pine forests through their fifth year, based on the Managements understanding that during these periods the historical cost of biological assets approximates their fair values; (ii) After the third and fifth year, eucalyptus and pine forests, respectively, are measured at fair value, which reflects the sales price of the assets less the costs of necessary to prepare the assets for the intended use or sale; (iii) The methodology used to measure the fair value of biological assets corresponds to future cash flows estimated according to the projected productivity cycle of forests, taking into consideration the pricing changes and growth of biological assets; (iv) The discount rate used in cash flows corresponds to the Companys WACC, which is periodically reviewed by Management; (v) The estimated productivity volumes of forests are defined using a stratification method based on the type, genetic material, forest management system, productive potential, rotation and age of forests. This set of characteristics forms an index called Average Annual Growth (AAG), expressed in cubic meters per hectare/year used as a basis to estimate productivity. The harvesting plan of Company forests varies from 6 to 7 years for eucalyptus trees and 14 to 15 years for pine trees; (vi) The prices of biological assets, denominated in R$/cubic meter, are obtained using market price surveys disclosed by specialized firms, and the prices charged by the Company on sales to third parties. The prices are adjusted by deducting the capital costs relating to land, since they refer to assets used to plant forests and other costs to adjust the assets to sale or consumption conditions; (vii) Planting expenses refer to the costs on development of biological assets; (viii) Depletion of biological assets is calculated based on the fair value of biological assets harvested in the period; (ix) The Company decided to revalue the fair value of its biological assets on a quarterly basis since it understands that this time interval is sufficient to prevent any significant gap in the fair value of the biological assets recoded in its financial statements.
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b) Reconciliation of changes in fair value The changes for the periods are as follows:
Balance as of December 31, 2009 Planting Transfers Depletion: . Historical cost . Fair value Change in fair value due to: . Price . Growth Balance as of December 31, 2010 Planting Depletion: . Historical cost . Fair value Change in fair value due to: . Price . Growth Balance as of June 30, 2011
Company 1,326,757 65,084 3,134 (16,495) (204,152) 45,499 175,111 1,394,938 33,540 (9,174) (104,743) 60,806 22,266 1,397,633
Consolidated 2,491,169 119,108 41,077 (28,844) (308,256) 75,455 373,170 2,762,879 60,759 (18,883) (177,321) 154,115 98,776 2,880,325
The depletion of biological assets in the periods was mainly recognized as production costs after allocating inventories as forests are harvested either to use in production or sale to third parties.
14
LOANS AND FINANCING
a) Breakdown of loans and financing

Company: In local currency . BNDES - Project MA1100 . BNDES - Other projects . Export credit . Working capital . Other In foreign currency (**) . Property, plant and equipment . Export prepayments . Export credit notes Annual interest % Current TJLP + 4.0 and basket (*) + 1.5 TJLP + 0.0 a 4.5 7.0 CDI + 0.6 1.0 to 8.7 252,784 93,925 150,423 17,357 1,019 515,508 6,412 294,199 44,892 345,503 861,011 4,978 865,989 Noncurrent 939,673 288,667 75,000 63,041 1,366,381 37,213 1,881,299 433,094 2,351,606 3,717,987 3,717,987 06/30/2011 Total 1,192,457 382,592 150,423 92,357 64,060 1,881,889 43,625 2,175,498 477,986 2,697,109 4,578,998 4,978 4,583,976
USD + 5.4 USD + 1.1 to 6.4 USD + 7.5 to 8.1
Subsidiaries Other Total Consolidated
7.2
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Company:
Annual interest % Current Noncurrent 1,069,519 295,459 83,333 57,656 1,505,967 37,474 1,990,554 480,981 2,509,009 4,014,976 4,014,976
12/31/2010 Total 1,324,230 367,490 150,452 100,765 58,796 2,001,733 41,407 2,247,404 529,647 2,818,458 4,820,191 26,278 10,628 4,857,097
In local currency . BNDES - Projeto MA1100 . BNDES - Other . Export credit . Working capital . Other In foreign currency (**) . Property, plant and equipment . Export prepayments . Export credit notes
TJLP + 2.0 and basket (*) + 1.5 TJLP + 0.0 a 4.5 7.0 CDI + 0.6 1.0 to 8.7
254,711 72,031 150,452 17,432 1,140 495,766 3,933 256,850 48,666 309,449 805,215 26,278 10,628 842,121
USD + 6.5 USD + 1.1 to 5.9 USD + 7.5 to 8.1
Subsidiaries Discounted export receivables Other Total Consolidated
USD + 1.0 to 1.5 7.2
(*) Currency basket basically composed of U.S. dollars. (**) In US dollars. BNDES
The Company has agreements with BNDES for the financing of industrial development projects, such as project MA 1100, repayable through January 2017. These loans are amortized on a monthly basis, including the corresponding interest. Export prepayments and export credit notes Export prepayments and credit notes were raised with banks in order to manage working capital and promote the Companys activities. The agreements will be settled up to May 2021. b) Maturities of long-term loans The maturity of the Companys loans as at June 30, 2011, classified in noncurrent liabilities, is as follows:
Year Amount 2012 424,907 2013 815,845 2014 694,037 2015 667,547 2016 297,987 2017 201,183 2018 244,131 2019 233,810 2020 and thereafter 138,540 Total 3,717,987
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c) Summary of changes in loans and financing
Balances as of December 31, 2009 Borrowings Accrued interest Exchange rate change Amortization and payment of interest Balances as of December 31, 2010 Borrowings Accrued interest Exchange rate change Amortization and payment of interest Balances as of June 30, 2011
d) Guarantees
Company 4,598,227 1,016,656 251,240 (143,467) (902,465) 4,820,191 214,398 124,582 (183,738) (396,435) 4,578,998
Consolidated 4,727,949 1,042,934 252,410 (143,958) (1,022,238) 4,857,097 214,398 124,726 (183,924) (428,321) 4,583,976
BNDES loans are guaranteed by land, buildings, improvements, machinery, equipment, and plants in Correia Pinto, Santa Catarina state, and Monte Alegre, Paran state, whose carrying amount as at June 30, 2011, net of depreciation is R$2,120,204, the financed assets, in addition to escrow deposits and sureties of controlling shareholders. Export credit, export prepayment, and working capital loans are not collateralized. e) Restrictive covenants At the end of the reporting period, the Company and its subsidiaries did not have any financing agreements that contain restrictive covenants requiring the maintenance of certain financial ratios on the transactions under the agreements or the debt payment acceleration.
15
TRADE ACCOUNTS PAYABLE

Company 12/31/2010 246,110 19,027 265,137 Consolidated 12/31/2010 247,928 21,911 269,839
Local currency Foreign currency
06/30/2011 235,440 4,730 240,170
06/30/2011 237,272 6,495 243,767
The Companys average collection term from suppliers is approximately 45 days.
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16
RESERVE FOR CIVIL, TAX AND LABOR PROVISION
a) Accrued contingencies Based on the individual analysis of the lawsuits and the opinion of their legal counsel, the Company and its subsidiaries recorded, in noncurrent liabilities, reserves for probable losses, as shown below:
Company: Tax: . PIS/COFINS (taxes on revenue) . CPMF (tax on banking transactions) . Income tax and social contribution . OTHER Labor Civil
Accrued amount (13,728) (8,646) (13,532) (1,614) (37,520) (60,898) (5,603) (104,021) (104,021)
Related escrow deposits 13,728 8,646 9,480 1,614 33,468 12,565 910 46,943 46,943
Net liability (4,052) (4,052) (48,333) (4,693) (57,078) (57,078)
06/30/2011 Other escrow deposits 25,901 23,074 48,975 48,975 1,361 50,336
Subsidiaries: Other Consolidated
Company: Tax: . PIS/COFINS (taxes on revenue) . CPMF (tax on banking transactions) . Income tax and social contribution . OTHER Labor Civil
Accrued amount (13,466) (8,646) (16,357) (1,508) (39,977) (55,996) (6,174) (102,147) (102,147)
Related escrow deposits 13,466 8,646 9,480 1,508 33,100 14,587 47,687 47,687
Net liability (6,877) (6,877) (41,409) (6,174) (54,460) (54,460)
12/31/2010 Other escrow deposits 22,676 19,025 41,701 41,701 1,310 43,011
Subsidiaries: Other Consolidated
As at June 30, 2011, the Companys accrued contingencies related to tax lawsuits related mainly to challenges regarding the payment of PIS/COFINS on the sale of shares and income tax and social contribution on the inflation adjustments under Law 8200/91, labor lawsuits comprising mostly lawsuits filed by former employees of the Companys plants claiming the payment of labor rights (severance pay, overtime, hazardous duty and health hazard premiums), compensations and joint liability, as well as civil lawsuits related mainly to compensation claims due to property damage and/or pain and suffering resulting from accidents.
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b) Summary of changes in reserve for civil, tax and labor provisions

Company / Consolidated Civil Net exposure (9,021) (94,032) (312) 1,775 3,159 37,797 (6,174) (54,460) (6,924) 1,481 4,306 (4,693) (57,078)
Balances as of December 31, 2009 New lawsuits/increases and inflation adjustments (Recognitions)/reversals (*) Balance as of December 31, 2010 New lawsuits/increases and inflation adjustments (Recognitions)/reversals Balance as of June 30, 2011
Tax (6,828) 440 (489) (6,877) 2,825 (4,052)
Labor (78,183) 1,647 35,127 (41,409) (6,924) (48,333)
(*) Substantially due to the update process and according to representatives of business, still under approval. c) Unaccrued civil, tax and labor risks The Company and its subsidiaries are parties to other tax, labor and civil lawsuits for which the risk of loss was assessed as possible, involving the following approximate amounts: tax - R$427,589 (does not include income tax assessment described below), labor - R$61,918, and civil - R$31,537. Based on the individual analysis of the lawsuits and the opinion of the Companys legal counsel, Management understands that these lawsuits do not need to be accrued because the likelihood of loss is possible. d) Contingent assets As at June 30, 2011, the Company was a plaintiff in lawsuits for which no amount was recognized in its financial statements and amounts are recognized only after a final and unappealable decision is rendered. The Companys legal counsel assessed the likelihood of a favorable outcome in some of the lawsuits as possible and probable. These lawsuits include the Companys claim for the full inflation adjustment and interest on inflation adjustment differences of compulsory loans made to Eletrobrs, deemed IPI credits on the purchase of electric power, fuel and natural gas used in production, and the offset of IPI credits paid on exports made while the Federal Governments tax offset program (BEFIEX) was effective. e) Income tax and social contribution assessment/Enrollment with REFIS On July 27, 2007, the Company received an income tax and social contribution assessment notice with respect to divestures made by the Company in 2003. This tax assessment notice, which amounts approximately to R$1,069 million, including principal, fine and interest at December 31, 2009 values, was not recorded as a reserve for contingencies in light of the aforementioned likelihood of loss. The Company joined the Tax Debt Refinancing Program (REFIS) within the legal deadline set out by Law 11941/09 and, as disclosed in the Material Fact of February 18, 2010, included part of the amounts collected in said tax assessment. As at December 31, 2009, the amount included in the REFIS tax installment plan was approximately R$862 million and, after applying the plans rules, it dropped to approximately R$332 million, accrued in the financial statements for the year ended December 31, 2009. During the 2nd quarter of 2011 the Internal Revenue Service agency provided to the Company the REFISs consolidation of debits, generating an additional accrual for penalties and interest in the amount of R$33 million, which were recorded in the financial income, along with proper monetary adjustment period. As of June 30, 2011 such provision has an accrual in the amount to R$433 million (R$349 million as at December 31, 2010). f) Commitments At the end of the reporting period, the Company and its subsidiaries do not have any future material commitments that have not been disclosed in the financial statements.
17
SHAREHOLDERS EQUITY
a) Capital As at June 30, 2011 and December 31, 2010, the Companys subscribed and paid-in capital in the amount of R$1,500,000 is represented by 917,683,296 shares, without par value.
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Preferred shares are nonvoting but have priority in capital reimbursement in case of Company liquidation and are paid dividends 10% higher than those paid on common shares. b) Treasury shares The Extraordinary Board of Directors Meeting held on October 13, 2010 approved the buyback of up to 45,278,818 preferred shares of the Company (equivalent to 10% of the outstanding shares of this class on that date) over a 365-day period, to be held in treasury and be subsequently sold or cancelled with no capital reduction. The Companys own shares purchased in prior periods are held in treasury for purposes of investment in existing funds. As at June 30, 2011, the Company held in treasury 27,196,800 preferred shares. As at June 30, 2011, the price of this class of shares (PN) traded on the So Paulo Stock Exchange was R$5.80 per share. c) Reserves Capital reserve Recognized pursuant to Law 8200/91, capital reserve refers to the effects of the inflation adjustment of capital, while not capitalized, and may be used for share buyback and capital increase purposes. Earnings reserve (i) Legal reserve Pursuant to Brazilian Corporate Law, the Company shall allocate 5% of net income for year that does not exceed 20% of capital to this reserve. The Company may not constitute such legal reserve in the year ended where the balance of such reserve, plus the amount of capital reserves exceed 30% of shareholders capital. The objective of the legal reserve is to ensure the integrity of the Companys capital and can only be utilized to offset losses or increase capital, if determined by the Shareholders Meeting.
(ii) Statutory reserve Comprises the variable portion of net income adjusted as provided for by the law and, pursuant to Company bylaws, from 5% to 75% of net income, to ensure investments in property, plant and equipment and reinforcement of working capital. (iii) Unrealized earnings reserve Used to absorb the balance arising from the measurement at fair value of the Companys biological assets in income statement, which are recognized in income but have not yet been economically and financially realized. After the actual realization of the biological asset, which occurs through the depletion of assets, the portion of fair value of the depleted asset is transferred from the unrealized earnings reserve to the statutory allocations of net income earned at the year end of each fiscal year. The related balance is net of applicable income tax and social contribution. (iv) Reserve of proposed dividends Recognized based on Managements proposed dividends on the portion exceeding the mandatory minimum dividend, whose payment is contingent upon approval by the Shareholders Meeting. Revaluation reserves Based on CVM Resolution 27/86, this balance refers to the revaluation of property, plant and equipment in 1988, realized through the depreciation or sale of the revalued assets. The related balance is net of applicable income tax and social contribution. d) Dividends As approved at the Annual Shareholders Meeting held on April 4, 2011, the Company paid additional dividends for the year 2010 amounting to R$70,002, corresponding to R$73.85 per thousand registered common share (ON) and R$81.24 per thousand registered preferred share (PN), paid on April 20, 2011.
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Company bylaws also grant Management the right to distribute interim dividends in advance during the year. The allocation of net income recorded under retained earnings is only recorded at year end. The Extraordinary Board of Directors Meeting held on June 21, 2011 approved interim dividends amounting to R$81,998 for 2011 year ended, corresponding to R$86.51 per thousand registered common shares (ON) and R$95.16 per thousand registered preferred shares (PN), paid on July 15, 2011.
18
NET REVENUE FROM SALES
The Companys net revenue includes only the sales of its products and is broken down as follows:
Company 06/30/2010 2,060,500 (11,279) (346,908) 1,702,313 1,335,155 367,158 1,702,313 Consolidated 06/30/2010 2,118,518 (12,984) (355,750) 1,749,784 1,341,570 408,214 1,749,784
Gross sales Discounts and rebates Taxes on sales
06/30/2011 2,227,572 (4,534) (372,285) 1,850,753 1,459,915 390,838 1,850,753
06/30/2011 2,289,632 (6,312) (378,868) 1,904,452 1,453,346 451,106 1,904,452
. Domestic market . Foreign market Net revenue from sales
19
EXPENSES/REVENUES BY NATURE
06/30/2011 (860,250) (291,513) (229,654) (71,955) (118,559) (152,620) (1,724,551) Company 06/30/2010 (742,110) (252,690) (227,553) (67,234) (108,590) (135,351) (1,533,528) 06/30/2011 (776,860) (298,913) (312,524) (91,897) (121,473) (175,556) (1,777,223) Consolidated 06/30/2010 (695,731) (258,557) (352,068) (86,526) (110,744) (119,957) (1,623,583)
Variable costs (raw materials and consumption supplies) Personnel expenses Depreciation, amortization and depletion Freight Services received Other
20
FINANCIAL INCOME (EXPENSES)

Company 06/30/2010 88,213 10,215 4,754 103,182 (124,290) (5,359) (26,085) (74,287) (230,021) (126,839) Consolidated 06/30/2010 90,999 10,214 4,688 105,901 (125,004) (5,359) (27,248) (74,601) (232,212) (126,311)
06/30/2011 Financial income . Income from short-term investments . Other . Exchange variation on assets Financial expenses . Interest on financing . Interests Provision - REFIS (note 16) . Other . Exchange variation on liabilities Financial income (expenses), net 133,632 14,496 (20,082) 128,046 (119,884) (74,048) (15,435) 177,829 (31,538) 96,508
06/30/2011 138,326 14,517 (19,998) 132,845 (125,250) (74,048) (11,513) 180,999 (29,812) 103,033
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21
EARNINGS PER SHARE
Basic earnings per share are calculated by dividing net income attributable to the holders of Company common and preferred shares by the weighted average number of common and preferred shares outstanding in the year. Diluted earnings per share correspond to basic earnings per share as the Company has no potentially dilutive common or preferred shares. As there was no change in the Companys equity structure in the reporting period, the weighted average number of common and preferred shares corresponds to the number of outstanding shares at the end of the period. The table below, presented in reais, reconciles net income as of June 30, 2011 and 2010 to the amounts used for the calculation of basic and diluted earnings per share:
Company / Consolidated 06/30/2011 Preferred shares (*) Total 600,855,733 (27,196,800) 573,658,933 66.57% 917,683,296 (27,196,800) 890,486,496 100.00%
Common shares Denominator Weighted average number of shares Treasury shares Weighted average number of shares % of shares Numerator Net income attributable to each class of shares (R$) Weighted average number of shares Earnings per share - basic and diluted (R$) 316,827,563 316,827,563 33.43%
101,408,234 316,827,563 0.3201
201,936,767 573,658,933 0.3520
303,345,000 890,486,496
Common shares Denominator Weighted average number of shares Treasury shares Weighted average number of shares 316,827,563 316,827,563
Company / Consolidated 06/30/2010 Preferred shares (*) Total 600,855,733 (16,907,900) 583,947,833 917,683,296 (16,907,900) 900,775,396
% of shares Numerator Net income attributable to each class of shares (R$) Weighted average number of shares Earnings per share - basic and diluted (R$)
(*) Preferred shares are entitled to dividends 10% higher than those paid to common shares.
33.03%
66.97%
100.00%
35,978,588 316,827,563 0.1136
72,948,412 583,947,833 0.1249
108,927,000 900,775,396
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22
OPERATING SEGMENTS
a) Criteria for identification of operating segments The Company segmented its operating structure taking into consideration the way Management manages the business. Management defined the following operating segments: (i) Forestry segment: includes planting and growing pine and eucalyptus trees to supply of the Companys paper plants and sell timber (logs) to third parties in the domestic market. (ii) Paper segment: substantially includes the production and sale of cardboard, kraftliner and recycled paper rolls in the domestic and foreign markets. (iii) Conversion segment: includes the production and sale of corrugated cardboard boxes and boards, and industrial bags in the domestic and foreign markets. b) Consolidated information on operating segments
Consolidated 06/30/2011 Forestry Sales, net: .Domestic market .Foreign market Revenue from sales to third parties Intersegment revenue Total sales, net Change in fair value of biological assets Cost of sales Gross profit Operating expenses Income from operations before financial income (expenses) Sale of products (tonne) .Domestic market .Foreign market .Intersegment Sale of timber (tonne) .Domestic market .Intersegment Investments in the current period Depreciation, depletion and amortization Total assets Total liabilities Shareholders equity 140,920 140,920 231,889 372,809 252,891 (417,927) 207,773 (32,799) Papers 519,747 409,073 928,820 412,528 1,341,348 (1,051,133) 290,215 (155,043) Conversion 792,394 42,033 834,427 6,632 841,059 (667,187) 173,872 (96,342) Corporate/ eliminations 285 285 (651,049) (650,764) 652,209 1,445 (9,001) Total 1,453,346 451,106 1,904,452 1,904,452 252,891 (1,484,038) 673,305 (293,185)
174,974
135,172
77,530
(7,556)
380,120
1,402,452 3,427,318 4,829,770 66,836 (204,026) 5,385,307 1,529,644 3,855,663
253,782 302,206 332,350 888,338 124,736 (92,192) 3,760,723 520,163 3,240,560
303,031 13,495 2,036 318,562 16,176 (14,692) 796,265 138,031 658,234
(334,386) (334,386) (3,427,318) (3,427,318) 1,072 (1,614) 2,441,462 4,866,746 (2,425,284)
556,813 315,701 872,514 1,402,452 1,402,452 208,820 (312,524) 12,383,757 7,054,584 5,329,173
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Consolidated 06/30/2010 Forestry Sales, net: .Domestic market .Foreign market Revenue from sales to third parties Intersegment revenue Total sales, net Change in fair value of biological assets Cost of sales Gross profit Operating expenses Income from operations before financial income (expenses) Sale of products (tonne) .Domestic market .Foreign market .Intersegment Sale of timber (tonne) .Domestic market .Intersegment 128,580 128,580 204,047 332,627 176,552 (432,078) 77,101 (25,219) Papers 485,309 362,063 847,372 393,146 1,240,518 (929,683) 310,835 (129,943) Conversion 727,392 46,151 773,543 4,684 778,227 (623,029) 155,198 (86,136) Corporate/ eliminations 289 289 (601,877) (601,588) 602,613 1,025 (108) Total 1,341,570 408,214 1,749,784 1,749,784 176,552 (1,382,177) 544,159 (241,406)
51,882
180,892
69,062
917
302,753
1,535,399 3,304,584 4,839,983 53,318 (251,651) 4,981,861 2,072,236 2,909,625
260,561 276,658 343,690 880,909 61,819 (84,864) 3,691,993 635,007 3,056,986
309,100 16,703 985 326,788 23,274 (14,163) 758,368 131,708 626,660
(344,675) (344,675) (3,304,584) (3,304,584) 365 (1,390) 2,379,635 4,173,558 (1,793,923)
569,661 293,361 863,022 1,535,399 1,535,399 138,776 (352,068) 11,811,857 7,012,509 4,799,348
Investments in the current period Depreciation, depletion and amortization Total assets Total liabilities Shareholders equity
Corporate refers basically to the corporate units expenses not apportioned among the other segments, and eliminations refer to adjustments of intersegment transactions. The information related to financial income (expenses) and income tax and social contribution was not disclosed in segment reporting because the Companys management does not use said data on a segmented basis, which is managed and analyzed on a consolidated basis. c) Information on net revenues from sales The Companys net revenues generated by sales to foreign market customers, in the consolidated balance sheet for the sixmonth period ended June 30, 2011, amount to R$451 million (R$408 million for the six-month period ended June 30, 2010). The table below shows the distribution of net revenues from sale for the periods indicated by country:
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Country Argentina China Ecuador Spain Singapore Philippines South Africa Germany Italy Turkey Nigeria Sundry others
Total revenue (R$ million) 112 64 36 31 20 17 15 15 13 11 10 107 451
Consolidated 06/30/2011 % of revenue Total net 5.9% 3.4% 1.9% 1.6% 1.1% 0.9% 0.8% 0.8% 0.7% 0.6% 0.5% 5.6% 24%
Total revenue (R$ million) 106 62 41 25 19 16 14 13 9 8 11 84 408
Consolidated 06/30/2010 % of revenue Total net 6.1% 3.5% 2.3% 1.4% 1.1% 0.9% 0.8% 0.7% 0.5% 0.5% 0.6% 4.8% 23%
The Companys net revenue for the quarter ended June 30, 2011 and 2010 generated by sales to domestic market customers amounts to R$1,453 million and R$1,342 million, respectively. For the six-month period ended June 30, 2011, in the papers segment, a single customer of cardboards accounted for approximately 21% of the Companys net revenue, corresponding to approximately R$402 million (R$386 million in the sixmonth period ended June 30, 2010). The remaining customer base is diluted as none of the other customers individually accounts for a material share of the Company's net operating revenue (above 10%) .
23
RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
a) Risk management The Company and its subsidiaries conduct transactions with financial instruments, all recorded in balance sheet accounts, that are intended to meet their operational needs and reduce exposure to financial risks, mainly credit and investment of funds, market risks (foreign exchange and interest rates) and liquidity risks, to which the Company understands that it is exposed based on the nature of its business and corporate structure. Management of these risks is implemented through strategies defined and approved by the Companys management in conjunction with control systems and specific limits. Transactions are not conducted with financial instruments for speculative purposes. In addition, Management assesses on a timely basis the Companys consolidated position and monitors the financial income (expenses) obtained based on the analysis of future projections to ensure that the business plan is fulfilled and the risks to which the Company is exposed are monitored. The mainly risks to which the Company is exposed are described below: Market risk Market risk is the risk that the fair value of future cash flows of a financial instrument fluctuates due to changes in market prices. Market prices are affected by two types of risks: interest rate risk and currency risk. The financial instruments affected by market risks are short-term investments, trade receivables, trade payables, loans and financing, available-for-sale instruments, and derivatives.
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(i) Currency risk The Company has transactions denominated in foreign currencies, which are exposed to market risks arising from fluctuations in foreign exchange rates. Any change in the exchange rate can increase or reduce these balances. Breakdown of this exposure is as follows:
Cash and short-term investments Trade accounts receivable (net of allowance for doubtful accounts) and other assets Trade accounts payable Export prepayments (financing) Net exposure
06/30/2011 65,500 196,600 (6,500) (2,702,087) (2,446,487)
Consolidated 12/31/2010 162,000 184,800 (19,000) (2,855,364) (2,527,564)
As at June 30, 2011, the balance by maturity for this net exposure is as follows:
2018 thereafter (530,182)
Year amount
2011 66,860
2012 (422,014)
2013 (497,835)
2014 (379,574)
2015 (309,377)
2016 (212,767)
2017 (159,798)
Total (2,444,687)
The Company has not entered into derivative contracts to hedge against long-term currency exposure. However, in order to hedge against this net liability exposure, the Company has a plan for projected exports sales of approximately US$500 million receivable annually that, if realized, would exceed the flow of payments for the respective liabilities, thus offsetting the effect of this currency exposure in the future. (ii) Interest rate risk The Company has loans indexed to the TJLP and CDI and short-term investments indexed to CDI and SELIC fluctuations, which expose these assets and liabilities to fluctuations in interest rates as shown in the interest sensitivity schedule shown below. The Company does not have swap or hedging derivative contracts to hedge against this risk. However, market interest rates are constantly monitored to assess the need to hedge against the risk of volatility in these rates. The Company understands that the high cost associated with entering into transactions at fixed interest rates in the Brazilian macroeconomic scenario justifies its option for floating rates. Breakdown of exposure to interest rate risk:
Short-term investments - CDI Short-term investments - Selic Asset exposure Financing - CDI Financing - TJLP Liability exposure
Credit risk and investment of funds
06/30/2011 2,413,021 209,180 2,622,201 (92,357) (1,575,049) (1,667,406)
Consolidated 12/31/2010 2,361,210 198,222 2,559,432 (100,765) (1,691,720) (1,792,485)
Credit risk is the risk that the counterparty of a business does not meet an obligation established by a financial instruments or contract with a customer, thus resulting in a financial loss. The Companys operating activities (mainly those related to trade accounts receivable) and investment, including deposits in banks and financial institutions, foreign exchange transactions, short-term investments and other contracted financial instruments, are exposed to credit risks. As at June 30, 2011, the maximum amount exposed to credit risks is the carrying amount of trade accounts receivable stated in note 6. The investment amount exposed to credit risks corresponds substantially to the amounts of short-term investments and securities, described in notes 4 and 5.
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The credit risks to which the Company is exposed are managed based on specific rules for acceptance of customers, credit ratings, and individual limits for exposure by customer, which are periodically reviewed. Monitoring of past-due trade receivables is carried out in a timely manner. Additionally, there are specific analyses and rules approved by Management for investment in financial institutions highly rated by rating agencies, and the types of investments offered in financial markets, which seek to invest funds conservatively and safely. Liquidity risk The Company monitors the risk of lack of funds through a recurring liquidity planning tool, in particular by means of financing with financial institutions, so that it has funds available to meet its obligations. The table below shows the maturity of the financial liabilities contracted by the Company, in consolidated, and the related amounts include principal and future interest levied on transactions calculated based on rates and ratios prevailing as at June 30, 2011:
2017 thereafter
-
Trade accounts payable Borrowings Total
2011 243,767 618,208 861,975
2012
-
2013
-
2014
-
2015
-
2016
-
924,821 924,821
958,466 958,466
809,316 809,316
753,374 753,374
346,741 346,741
985,443 985,443
Total 243,767 5,396,369 5,640,136
The projection for the following years, which was approved by the Board of Directors, shows the Companys ability to meet the obligations, if required. The Companys equity structure consists of its net debt, consisting of loans and financing (note 14) less the cash, cash equivalents, and securities (notes 4 and 5), and shareholders equity, including the balance of issued capital and all recognized reserves. The Companys net indebtedness is broken down as follows:
Cash, cash equivalents and securities Loans and financing Net indebtedness Shareholders equity Debt to asset ratio
b) Financial instruments
06/30/2011 2,691,230 (4,583,976) (1,892,746) 5,329,173 (0.36)
Consolidated 12/31/2010 2,729,327 (4,857,097) (2,127,770) 5,154,502 (0.41)
The Companys main financial instruments are classified as follows: Loans and receivables and other financial liabilities The financial instruments included in this group comprise balances arising from transactions related to the Companys activities, such as accounts receivable, trade accounts payable, loans and financing, short-term investments and cash and cash equivalents. All of them are recognized at their notional value plus, when applicable, contractual charges and interest, expenses and income from which are recognized in income (loss) for the year. Additionally, the Company has a financial instrument, which is classified as interest rate swap for a pre-payment of export notes, which is paid a rate of Libor + 1.15% pa and received from the bank a rate of Libor + 1.40% pa on a notional amount of $ 25 million (U.S. $ 43 million dollars), generating a revenue of R$ 44 reais in income every six months, received by the Company. Such financial instrument has a maturity date in 2015. According to the hierarchy of the CPC - 40 such financial instrument is classified as level 3, as the transaction has a fixed settlement value, without any changing in the settlement value impacted from market indicators, due to the fact that swap rate is Libor by Libor impacting only the difference of 1.40% pa to 1.15% pa.
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Available-for-sale financial assets The Company classified its securities that comprise National Treasury Bills (LFT) (note 5) as financial assets available for sale, because they can be traded in the future. These securities are recorded at fair value. Due to this assets liquidity, its fair value approximates its amortized cost, and thus it has no impact on the Companys shareholders equity. As at June 30, 2011, the balance of these securities on a consolidated basis is R$209,180. c) Sensitivity analysis The Company presents below sensitivity schedules for currency and interest rate risks to which the Company is exposed considering that any effects would impact future earnings, based on the exposures presented as at June 30, 2011. (i) Currency exposure The Company has assets and liabilities indexed to a foreign currency in the balance sheet as at June 30, 2011, and for sensitivity analysis purposes adopted as scenario I the future market rate in effect at the time these statements were prepared. In scenario II and scenario III this rate was adjusted by 25% and 50%, respectively. It is important to note in the maturity schedule disclosed in note 14 that most of the Companys loans will not mature in 2011. Therefore, exchange fluctuations will have no impact on cash resulting from this analysis. On the other hand, the Companys exports should already be impacted by currency variation during the year. The sensitivity analysis of exchange fluctuations is being calculated in relation to net currency exposure (basically loans and financing in foreign currency) and the effects of these scenarios were not considered in relation to export sales, which as mentioned previously tend to offset any possible future exchange loss. Accordingly, the schedule below simulates the effects of currency fluctuations on future income (loss) for 12 months.
Balance as of 06/30/2011 Scenario I US$ Assets Cash and cash equivalents Trade accounts receivable, net of allowance for doubtful accounts and discounted export receivables Liabilities Trade accounts payable Borrowings Total effect on net income - R$ 41,958 Rate 1.60 R$ income (loss) 1,632 Scenario II Rate 2.00 R$ income (loss) 18,415 Scenario III Rate 2.40 R$ income (loss) 35,199
125,937 3,011 1,730,887
1.60 1.60 1.60
4,899 (117) (67,332) (60,918)
2.00 2.00 2.00
55,274 (1,322) (759,686) (687,319)
2.40 2.40 2.40
105,649 (2,526) (1,452,041) (1,313,719)
(ii) Interest rate exposure Short-term investments and loans, except those linked to the TJLP, are linked to fixed CDI rate. For sensitivity analysis purposes, for the projection of scenario I the Company used the same rates prevailing on dates close to the end of the reporting period for Selic and CDI, given their proximity. These rates were adjusted by 25% and 50% for the projection of scenarios II and III, respectively. Accordingly, the table below simulates the effects of interest rate fluctuations on income (loss) for 12 months:
Balance as of 06/30/2011 Scenario I R$ Short-term investments Bank Certificates of Deposit (CDBs) Treasury Bills (LTFs) Borrowings Working capital BNDES Total effect on net income - R$ CDI Selic CDI TJLP 2,413,021 209,180 92,357 1,575,049 Rate 12.25% 12.25% 12.25% 6.00% R$ income (loss) 295,595 25,625 (11,314) (94,503) 215,403 Scenario II Rate 15.31% 15.31% 15.31% 7.50% R$ income (loss) 369,494 32,031 (14,142) (118,129) 269,254 Scenario III Rate 18.38% 18.38% 18.38% 9.00% R$ income (loss) 443,393 38,437 (16,971) (141,754) 323,105
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24
EMPLOYEE BENEFITS AND PENSION PLAN
The Company and its subsidiaries offer their employees life insurance, healthcare, and pension plan benefits. These benefits are accounted for on an accrual basis and stop being granted after severance. a) Pension Plan Klabins pension fund Plano Prever, administered by Ita Vida e Previdncia S.A., was created in 1986 as a defined benefit plan. Beginning 1998, the plan was restructured, resulting in the transformation of the plan into a defined contribution plan. In November 2001, a new pension plan was created, the Plano de Aposentadoria Complementar Klabin - PACK, also administered by Ita Vida e Previdncia S.A. and structured as a PGBL (plan/life insurance plan). The participants of the Prever Plan were offered the option to migrate to the new plan. The Company does not assume any responsibility to pay minimum benefits to retirees in either of the plans. b) Healthcare Pursuant to the agreement entered into the Union of the So Paulo State Pulp and Paper Workers, the Company pays for a lifetime healthcare plan (Hospital SEPACO, principal plan) for its former employees who retired up to 2001, and their dependents (spouses and children until they reach majority age), while no new beneficiaries are allowed. The Company understands that said healthcare benefit is a defined benefit plan in accordance with accounting practices adopted in Brazil and thus recognizes a provision for the estimated actuarial liability in the amount of R$34,605 (R$32,805 as at December 31, 2010), in noncurrent liabilities, in line item Other payables and provisions. As at December 31, 2010, the actuarial appraisal considered the following economic and biometrical assumptions: nominal discount rate of 10.75% per year nominal growth rate of variable medical costs of 12.5% per year in 2011, reaching 6.5% per year in 2023, long-term inflation of 4.5% per year and biometrical mortality table RP 2000. The amount recognized as expense for the six-month period ended June 30, 2011 totaled R$1,200. The increase or decrease of one percentage point in the rates used in actuarial calculations, does not bring significant effects on the Company's financial statements. This plan does not assets for disclosure.
25
INSURANCE (NOT REVIEWED BY INDEPENDENT AUDITOR)
As at June 30, 2011, the Company has insurance against fire, lightening, explosion, electrical damages, and windstorm covering all its industrial, administrative, and storage facilities. The Company also has general civil liability and D&O, auto, and multiperils insurance for its chattels, amounting to R$2,001,666. In view of the nature of its activities, the location of forests in different areas, and the preventive actions taken against fire and other risks, the Company, rather than contracting insurance against damage caused to forests, opted to adopt protection policies that, historically, have proven to be highly effective and caused no harm to the Companys activities or financial position. Management understands that the Companys structure of management of the financial risks related to forest activities is appropriate to guarantee its continuity as a going concern.
26
EVENTS AFTER THE REPORTING PERIOD
The issuance of this Interim Financial Information of Klabin S.A. (Company) and its subsidiaries were authorized by the finance executive board on July 28, 2011.
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IN ACCORDANCE WITH THE DIFFERENTIATED CORPORATE GOVERNANCE PRACTICES REGULATION - LEVEL 1, WE PRESENT BELOW ADDITIONAL DISCLOSURES ON THE COMPANY AS AT JUNE 30, 2011. 1 COMPANYS OWNERSHIP INTEREST INCLUDING SHAREHOLDERS WITH MORE THAN 5% OF VOTING CAPITAL, DETAILED UP TO THE LEVEL OF INDIVIDUALS
(a) Companys ownership interest

SHAREHOLDER Klabin Irmos & Cia. Niblak Participaes S.A. Monteiro Aranha S.A. (i) The Bank Of New York ADR Department (*) BNDES Participaes S.A. BNDESPAR Treasury shares Other (**) TOTAL ON 163,797,753 24,699,654 63,458,605 64,871,551 316,827,563 % 51.70 7.80 20.03 SHARES PN % TOTAL - 163,797,753 - 24,699,654 27,980,053 4.66 91,438,658 56,282,445 9.37 56,282,445 % 17.85 2.69 9.96 6.13
- 88,113,340 14.66 88,113,340 9.60 - 27,196,800 4.53 27,196,800 2.96 20.47 401,283,095 66.78 466,154,646 50.80 100.00 600,855,733 100.00 917,683,296 100.00
(*) Foreign shareholders. (**) Shareholders with less than 5% of voting capital.
(b) Ownership interest of controlling shareholders, up to the level of individuals

CONTROLLING SHAREHOLDER/INVESTOR: KLABIN IRMOS & CIA. SHAREHOLDERS Jacob Klabin Lafer Adm. Partic. S.A. Miguel Lafer Participaes S.A. VFV Participaes S.A. PRESH S.A. GL Holdings S.A. GLIMDAS Participaes S.A. DARO Participaes S.A. DAWOJOBE Participaes S.A. ESLI Participaes S.A. LKL Participaes S.A. TOTAL
SHARES Number % of capital 1 12.52 1 6.26 1 6.26 1 12.52 1 12.52 1 11.07 1 11.07 1 11.07 1 8.36 1 8.35 10 100.00
General partnership, with capital in the amount of R$1,000,000.00, represented by shares of various amounts.
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CONTROLLING SHAREHOLDER/INVESTOR: Jacob Klabin Lafer Adm. Partic. S.A. SHAREHOLDERS Miguel Lafer Vera Lafer TOTAL CONTROLLING SHAREHOLDER/INVESTOR: Miguel Lafer Participaes S.A. SHAREHOLDERS Miguel Lafer Vera Lafer TOTAL CONTROLLING SHAREHOLDER/INVESTOR: VFV Participaes S.A. SHAREHOLDERS Vera Lafer Other TOTAL CONTROLLING SHAREHOLDER/INVESTOR: PRESH S.A. SHAREHOLDERS Sylvia Lafer Piva Pedro Franco Piva Horcio Lafer Piva Eduardo Lafer Piva Regina Piva Coelho Magalhes TOTAL ON % SHARES PN % TOTAL 17,658,895 99.99993 17,658,895 12 0.00007 12 33.33 2,943,151 33.33 2,943,151 % 66.66662 0.00005 11.11111 11.11111 SHARES ON % Total 981,094,312 99.9999 688 0.0001 981,095,000 100.0000 SHARES ON % Total 223,510,726 99.9999 344 0.0001 223,511,070 100.0000 SHARES ON % Total 215,059,063 50.00 215,059,063 50.00 430,118,126 100.00
2,943,151 2,943,151 2,943,151 8,829,453
33.34 2,943,151 11.11111 100.00 17,658,907 100.00000 26,488,360 100.00000
CONTROLLING SHAREHOLDER/INVESTOR: GL Holdings S.A. SHAREHOLDERS Graziela Lafer Galvo Other TOTAL ON % 4,233,864 99.99991 4 0.00009 4,233,868 100.00000 SHARES PN % TOTAL % 8,467,726 99.99993 12,701,590 99.99992 6 0.00007 10 0.00008 8,467,732 100.00000 12,701,600 100.00000
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CONTROLLING SHAREHOLDER/INVESTOR: GLIMDAS Participaes S.A. SHARES SHAREHOLDERS ON % PN % TOTAL % Israel Klabin 1,756,611 92.5090 1,756,611 45.747 Alberto Klabin (*) 323,502 16.6664 23,707 1.2485 347,209 9.042 Leonardo Klabin (*) 323,502 16.6664 23,707 1.2485 347,209 9.042 Stela Klabin (*) 323,502 16.6664 23,707 1.2485 347,209 9.042 Maria Klabin (*) 323,502 16.6664 23,707 1.2485 347,209 9.042 Dan Klabin (*) 323,502 16.6664 23.707 1.2485 347,209 9.042 Gabriel Klabin (*) 323,502 16.6664 23,707 1.2485 347,209 9.042 Esplio Maurcio Klabin (*) 32 0.0017 32 0.001 1,941,044 100.0000 1,898,853 100.0000 3,839,897 100.0000 TOTAL (*) Shares subject to usufruct, with the usufructuary Israel Klabin having voting right. CONTROLLING SHAREHOLDER/INVESTOR: DARO Participaes S.A. SHARES SHAREHOLDERS ON % Total Daniel Miguel Klabin 1,627,732 53.065 Rose Klabin (*) 479,900 15.645 Amanda Klabin (*) 479,900 15.645 David Klabin (*) 479,900 15.645 3,067,432 100.000 TOTAL (*) Shares subject to usufruct, with the usufructuary Daniel Miguel Klabin having voting right. CONTROLLING SHAREHOLDER/INVESTOR: DAWOJOBE Participaes S.A. SHARES SHAREHOLDERS ON % Armando Klabin 4 0.20 Wolff Klabin (*) 516 24.95 Daniela Klabin (*) 516 24.95 Bernardo Klabin (*) 516 24.95 Jos Klabin (*) 516 24.95 2,068 100.00 TOTAL (*) Shares subject to usufruct, with the usufructuary Armando Klabin having voting right. CONTROLLING SHAREHOLDER/INVESTOR: ESLI Participaes S.A. SHAREHOLDERS Cristina Levine Martins Xavier Regina Klabin Xavier Roberto Klabin Martins Xavier TOTAL
SHARES ON % Total 5,891,253 33.3333 5,891,253 33.3333 5,891,254 33.3334 17,673,760 100.0000
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CONTROLLING SHAREHOLDER/INVESTOR: LKL Participaes S.A. SHAREHOLDERS Cristina Levine Martins Xavier Regina Klabin Xavier Roberto Klabin Martins Xavier TOTAL CONTROLLING SHAREHOLDER/INVESTOR: NIBLAK PARTICIPAES S.A. SHAREHOLDERS Miguel Lafer Part. S.A. VFV Participaes S.A. GL Holdings S.A. Glimdas Participaes S.A. Daro Participaes S.A. Dawojobe Partic. S.A. Armando Klabin Esli Participaes S.A. Pedro Franco Piva TOTAL SHARES ON % Total 3,038,036 12.521 3,038,035 12.521 3,038,061 12.521 2,686,869 11.074 2,686,869 11.074 2,562,686 10.562 124,183 0.511 4,050,722 16.695 3,038,061 12.521 24,263,522 100.000 SHARES ON % Total 5,977,833 33,3333 5,977,833 33.3333 5,977,834 33.3334 17,933,500 100.000
CHANGES IN THE OWNERSHIP STRUCTURE

June 30, 2010 Number of shares Purchase subscription Changes New members Dismissal of members June 30, 2011 Number of shares Variation %
SHAREHOLDERS Controlling shareholders
Type
Sale
ON PN
202,093,755 110,308,846
63.79 18.36
16,887,254
(19,658,058)
2,000,000
(2,000,000)
202,093,755 107,538,042
63.79 17.90
0.00 -2.51
Members of Board of Directors Members of Executive Board Members of Supervisory Board Treasury shares Other Shareholders Total
ON PN ON PN
33,202,415 12,701,984
10.48 2.11
94,149 4,779,779
(5,604,597)
33,296,564 11,877,166
10.51 1.98
0.28 -6.49
84,738
0.01
8,100
(6,000)
400,000
(7,100)
479,738
0.08
466.14
ON PN ON PN ON PN ON PN
1,000 3,420
0.00 0.00
1,000 3,420
0.00 0.00
16,907,900 81,530,393 460,848,845 316,827,563 600,855,733
2.81 25.73 76.70 100.00 100.00 (94,149) (21,675,133) 0 0
10,288,900
27,196,800 81,436,244 453,760,567 316,827,563 600,855,733
4.53 25.70 75.52 100.00 100.00
60.85 -0.12 -1.54
14,979,755 0 0
(2,400,000) 0 0
2,007,100 0 0
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NUMBER OF COMPANYS SHARES DIRECTLY OR INDIRECTLY HELD BY CONTROLLING SHAREHOLDERS, MEMBERS OF THE EXECUTIVE BOARD AND MEMBERS OF THE BOARD OF DIRECTORS AND NUMBER OF SHARES OUTSTANDING
As at June 30, 2010 SHAREHOLDERS Controlling shareholders Members of Board of Directors Members of Executive Board Members of Supervisory Board Treasury shares Other shareholders Total Number of shares outstanding As at June 30, 2011 SHAREHOLDERS Controlling shareholders Members of Board of Directors Members of Executive Board Members of Supervisory Board Treasury shares Other shareholders Total Number of shares outstanding 81,436,244 81,437,244 25.70 25.70 316,827,563 100.00 1,000 0.00 ON 202,093,755 33,296,564 % 63.79 10.51 81,530,393 81,531,393 25.73 25.73 316,827,563 100.00 1,000 0.00 ON 202,093,755 33,202,415 % 63.79 10.48 SHARES PN 110,308,846 12,701,984 84,738 3,420 16,907,900 460,848,845 460,852,265 % 2.11 0.01 0.00 2.81 Total 45,904,399 84,738 4,420 16,907,900 % 34.04 5.00 0.01 0.00 1.84 59.10 59.10 18.36 312,402,601
76.70 542,379,238 76.70 542,383,658
600,855,733 100.00 917,683,296 100.00
SHARES PN 107,538,042 11,877,166 479,738 3,420 27,196,800 453,760,567 453,763,987 % 1.98 0.08 0.00 4.53 Total 45,173,730 479,738 4,420 27,196,800 % 33.74 4.92 0.05 0.00 2.96 58.32 58.32 17.90 309,631,797
75.52 535,196,811 75.52 535.201.231
600,855,733 100.00 917,683,296 100.00
OTHER INFORMATION Relationship with Independent Auditors In conformity with CVM Instruction 381/03, the auditing firm Deloitte Touche Tohmatsu Auditores Independentes did not provide non-audit services accounting for more than 5% of its total fees. The Companys policy for non-audit services contracted from its independent auditors is based on principles designed to ensure the independence of the auditors. Those principles, which follow internationally accepted standards, consist of the following: (a) the auditor must not audit his own work; (b) the auditor must not perform managerial jobs at his client; and (c) the auditor must not promote his clients interests.
Page 62 of 64
OPINIONS AND DECLARATIONS/INDEPENDENT ACCOUNTANTS REVIEW REPORT (Convenience Translation into English from the Original Previously Issued in Portuguese) REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION To the Board of Directors and Shareholders of Klabin S.A. So Paulo - SP Introduction We have reviewed the accompanying individual and consolidated interim financial information of Klabin S.A. (the Company) and its subsidiaries, included in the Interim Financial Information Form (ITR), for the quarter ended June 30, 2011, which comprises the balance sheet and the related income statement, statement of comprehensive income, statement of changes in equity, and statement of cash flows for the quarter and six-month period then ended, including the selected explanatory notes. Management is responsible for the preparation of the individual interim financial information in accordance with CPC 21 - Interim Financial Reporting and the consolidated interim financial information in accordance with CPC 21 and IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board (IASB), as well as for the presentation of such information in accordance with the standards issued by the Brazilian Securities Commission (CVM), applicable to the preparation of Interim Financial Information (ITR). Our responsibility is to express a conclusion on this interim financial information based on our review. Scope of review We conducted our review in accordance with Brazilian and international standards on review of interim financial information (NBC TR 2410 and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the standards on auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion on the individual interim financial information Based on our review, nothing has come to our attention that causes us to believe that the accompanying individual interim financial information included in the ITR referred to above is not prepared, in all material respects, in accordance with CPC 21 applicable to the preparation of Interim Financial Information (ITR) and presented in accordance with the standards issued by the Brazilian Securities Commission.
Page 63 of 64
Deloitte Touche Tohmatsu
Conclusion on the consolidated interim financial information Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated interim financial information included in the ITR referred to above is not prepared, in all material respects, in accordance with CPC 21 and IAS 34 applicable to the preparation of Interim Financial Information (ITR) and presented in accordance with the standards issued by the Brazilian Securities Commission. Emphasis of matter As described in Note 2, the individual financial statements have been prepared in accordance with accounting practices adopted in Brazil. In the case of Klabin S.A., these practices differ from IFRSs, applicable to the individual financial statements, only with respect to the valuation of investments in subsidiaries under the equity method of accounting, while for IFRS purposes these investments would be measured at cost or fair value. Other matters Interim statements of value added We have also reviewed the individual and consolidated interim statements of value added (DVA), for the six-month period ended June 30, 2011, the presentation of which is required by the standards issued by the Brazilian Securities Commission (CVM) applicable to the preparation of Interim Financial Information (ITR), and is considered as supplemental information for IFRS that does not require the presentation of DVA. These statements were subject to the same review procedures described above and, based on our review, nothing has come to our attention that causes us to believe that they are not prepared, in all material respects, in relation to the individual and consolidated interim financial information taken as a whole. The accompanying interim financial information has been translated into English for the convenience of readers outside Brazil. So Paulo, July 28, 2011
DELOITTE TOUCHE TOHMATSU Auditores Independentes
Gilberto Grandolpho Engagement Partner
2011-1012
Page 64 of 64

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

Klabin S.A. and Subsidiaries

Deloitte Touche Tohmatsu Auditores Independentes

2011 Deloitte Touche Tohmatsu. All rights reserved.

Deloitte Touche Tohmatsu

DELOITTE TOUCHE TOHMATSU Auditores Independentes

Gilberto Grandolpho Engagement Partner

2011 Deloitte Touche Tohmatsu. All rights reserved.

ITR - Quarterly Information - 06/30/2011 - KLABIN S.A.

Individual Financial Statements

Consolidated Financial Statements

Opinions and Declarations

ITR - Quarterly Information - 06/30/2011 - KLABIN S.A.

Company Information / Capital Composition

Current Quarter 06/30/2011

ITR - Quarterly Information - 06/30/2011 - KLABIN S.A.

Company Information / Proceeds in Cash

ITR - Quarterly Information - 06/30/2011 - KLABIN S.A.

Individual Financial Statements / Assets Balance Sheet (Thousands of Reais)

ITR - Quarterly Information - 06/30/2011 - KLABIN S.A.

Individual Financial Statements / Liabilities Balance Sheet (Thousands of Reais)

ITR - Quarterly Information - 06/30/2011 - KLABIN S.A.

Individual Financial Statements / Income Statement (Thousands of Reais)

0.32010 0.35200 0.32010 0.35200

0.07020 0.07720 0.07020 0.07720

0.11360 0.12490 0.11360 0.12490

ITR - Quarterly Information - 06/30/2011 - KLABIN S.A.

Individual Financial Statements / Statement of Comprehensive Income (Thousands of Reais)

ITR - Quarterly Information - 06/30/2011 - KLABIN S.A.

ITR - Quarterly Information - 06/30/2011 - KLABIN S.A.

Capital 1,500,000 1,500,000 1,500,000

ITR - Quarterly Information - 06/30/2011 - KLABIN S.A.

Capital 1,500,000 1,500,000 1,500,000

ITR - Quarterly Information - 06/30/2011 - KLABIN S.A.

Individual Financial Statements / Statement of Value Added (Thousands of Reais)

ITR - Quarterly Information - 06/30/2011 - KLABIN S.A.

Consolidated Financial Statements / Assets Balance Sheet (Thousands of Reais)

ITR - Quarterly Information - 06/30/2011 - KLABIN S.A.

Consolidated Financial Statements / Liabilities Balance Sheet (Thousands of Reais)

ITR - Quarterly Information - 06/30/2011 - KLABIN S.A.

Consolidated Financial Statements / Income Statement (Thousands of Reais)

0.17220 0.18930 0.17220 0.18930

0.32010 0.35200 0.32010 0.35200

0.07020 0.07720 0.07020 0.07720

0.11360 0.12490 0.11360 0.12490

ITR - Quarterly Information - 06/30/2011 - KLABIN S.A.

Consolidated Financial Statements / Statement of Comprehensive Income (Thousands of Reais)

ITR - Quarterly Information - 06/30/2011 - KLABIN S.A.

ITR - Quarterly Information - 06/30/2011 - KLABIN S.A.

-81,998 -81,998 303,345 303,345 357 540 -183 221,704

ITR - Quarterly Information - 06/30/2011 - KLABIN S.A.

5.06 5.06.02 5.06.03 5.06.04 5.06.05

ITR - Quarterly Information - 06/30/2011 - KLABIN S.A.

Consolidated Financial Statements / Statement of Value Added (Thousands of Reais)

ITR - Quarterly Information - 06/30/2011 - KLABIN S.A.

Klabin S.A. and Subsidiaries

Deloitte Touche Tohmatsu Auditores Independentes

ITR - Quarterly Information - 06/30/2011 - KLABIN S.A.

(Amounts in thousands of Brazilian reais, unless otherwise stated) 1 GENERAL INFORMATION

BASIS OF PRESENTATION OF INTERIM FINANCIAL INFORMATION AND SIGNIFICANT ACCOUNTING PRACTICES

2.3 New pronouncements, revisions and interpretations

CONSOLIDATION OF INTERIM FINANCIAL INFORMATION