JBS S.

A ITR - Three month period

As of March 31, 2007

Report of Independent Auditors

To the shareholders and management of JBS S.A

1. We have performed a special review of balance sheet of JBS S.A (Parent Company) and its subsidiaries as of March 31, 2007 and the related statements of income and the performance report for the quartes ended on that date prepared under the responsibility of management. Our resopnsibility is to issue our special report, without expressing an opinion on these financial statements. The interim financial information of Swift-Armour Sociedad Annima Argentina, a whollyowned subsidiary of the Company, for the three months ended March 31, 2007 were subjected to a special review by other independent auditors and our special review was also based on its review.

2. We conducted our limited review in accordance with specific standards established by the Brazilian Institute of Independent Auditors (IBRACON), together with the Federal Accounting Council, wich consisted principally of: (a) inquiring of and discussing with executive officers responsible for the accounting, financial and operating areas of the Company relating the criteria adopted in preparing the interim consolidated financial information, and (b) reviewing the information and subsequent events that had or might have had material effects on the financial position and results of operations of the Company.

3. Based on our limited review and the report on limited review of other independent auditors of Swift-Armour Sociedad Annima Argentina as described in the first paragraph hereof, we are not aware of any material modifications that should be made to the interim consolidated financial information referred to in paragraph 1 for them to be in accordance with generally accepted accounting principles in Brazil, specially applicable to the preparation of interim consolidated financial information.

4. As described in note 4, the Company has closed its primary and secondary public offering of sales of shares as of shares as of March 28, 2007 and started its negociation on Brazilian Stock Exchange (New Market) as of March 29, 2007. This primary public offering has generated a capitalization of R$ 1.200.000 thousand in the Cash and Cash Equivalent and the counterpart was the Capital Stock and Premium on Shares Issued and the receipt of this amount occurred as of April 2, 2007.

So Paulo, April 24, 2007

Auditores Independentes - S/S CRC 2 SP 018.196/O-8

Luiz Cludio Fontes Scio-contador CRC 1 RJ-032.470/O-9 T-PR-S-SP

JBS S.A. and its Subsidiaries BALANCE SHEETS (In thousands of Reais)

Company
31.03.07 31.12.06

Consolidated
31.03.07 31.12.06 31.03.07

Company
31.12.06

Consolidated
31.03.07 31.12.06

ASSETS CURRENT ASSETS Cash and cash equivalents (Note 4) Marketable securities (Note 5) Trade accounts receivable from customers (Note 6) Inventories (Note 7) Taxes recoverable (Note 8) Prepaid expenses Other current assets 1.187.581 206.113 708.215 631.764 437.405 7.639 46.063 54.375 145.346 665.782 563.935 424.941 1.936 43.494 1.221.931 246.941 747.879 785.016 546.361 10.336 68.184 68.629 192.442 692.819 657.504 567.264 2.956 68.938

LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Trade accounts payable to suppliers ( Note 12) Loans and financings (Note 13) Payroll and taxes payable (Note 14) Other current liabilities 354.981 981.276 90.466 39.385 271.460 579.128 73.142 41.545 415.806 1.073.432 114.045 42.405 309.294 653.638 84.447 51.886

TOTAL CURRENT LIABILITIES

1.466.108

965.275

1.645.688

1.099.265

TOTAL CURRENT ASSETS

3.224.780

1.899.809

3.626.648

2.250.552

LONG-TERM ASSETS Long-term assets Account receivable from related parties (Note 9) Judicial deposits and others Deferred income tax and social contribution (Note 16) Taxes recoverable (Note 8) Total Long-term assets Permanent assets Advances for investments in subsidiaries (Note 9) Investments in subsidiaries (Note 10) Other investments Property, plant and equipment (Note 11) Intangible assets Deferred charges

LONG-TERM Loans and financings (Note 13) Deferred income tax and social contribution (Note 16) Accrual for contingencies (Note 15) Other Long-term liabilities 1.868.978 61.984 49.568 25.255 2.039.977 62.665 47.207 25.758 1.868.978 61.984 50.056 32.037 2.039.977 62.665 53.005 26.471

34.067 5.665 16.853 24.129 80.714 516.460 10 1.034.002 9.615 1.560.087 1.640.801

67.523 4.742 16.050 24.129 112.444 35.051 367.822 10 899.176 9.615 1.311.674 1.424.118

8.915 25.572 33.670 68.157 20.988 10 1.311.542 23.806 1.356.346 1.424.503

5.626 23.492 34.752 63.870 10 1.125.218 24.340 847 1.150.415 1.214.285

TOTAL LONG-TERM LIABILITIES Minority interest

2.005.785 -

2.175.607 -

2.013.055 (1.280)

2.182.118 409

SHAREHOLDERS' EQUITY (Note 17) Capital stock Capital reserve Revaluation reserve Retained earnings TOTAL SHAREHOLDERS' EQUITY 91.748 1.160.776 129.199 11.965 1.393.688 52.524 130.521 183.045 91.748 1.160.776 129.199 11.965 1.393.688 52.524 130.521 183.045

Total Permanent assets

TOTAL LONG-TERM ASSETS

TOTAL ASSETS

4.865.581

3.323.927

5.051.151

3.464.837

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

4.865.581

3.323.927

5.051.151

3.464.837

The accompanying explanatory notes are an integral part of the financial information

JBS S.A. and its Subsidiaries STATEMENTS OF INCOME FOR THE PERIOD OF THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (In thousands of Reais)
Company
2007 GROSS SALES REVENUE Sales of products: Income from sales of products - domestic market Income from sales of products - exports "Pro Forma" 2006

Consolidated
2007 "Pro Forma" 2006

494.980 522.879 1.017.859

407.082 413.407 820.489

550.766 651.607 1.202.373

449.791 509.559 959.350

SALES DEDUCTIONS Returns and discounts Sales taxes (37.973) (62.196) (100.169) NET SALE REVENUE Cost of goods sold GROSS INCOME OPERATING INCOME (EXPENSE), NET General and administrative expenses Selling expenses Financial income (expense), net (Note 18) Equity Initial Public Offering expenses (14.853) (89.073) (39.857) (21.711) (50.564) (216.058) (16.062) (69.764) (20.456) (26.448) (132.730) (20.567) (99.894) (56.983) (50.564) (228.008) (23.157) (77.586) (42.190) (142.933) 917.690 (670.046) 247.644 (16.189) (46.644) (62.833) 757.656 (562.241) 195.415 (46.267) (69.968) (116.235) 1.086.138 (828.495) 257.643 (26.595) (46.644) (73.239) 886.111 (681.667) 204.444

OPERATING INCOME NON-OPERATING INCOME (EXPENSE), NET INCOME BEFORE INCOME TAX AND SOCIAL CONTRIBUTION Income tax and social contribution Deferred income tax and social contribution

31.586 68 31.654 (21.814) 803 (21.011) 10.643

62.685 (181) 62.504 (30.243) (30.243) 32.261

29.635 60 29.695 (22.074) 2.489 (19.585) 10.110 533

61.511 129 61.640 (29.395) (29.395) 32.245 16 32.261

INCOME BEFORE MINORITY INTEREST Minority interest NET INCOME Net income per thousands of Group share Statement of EBITDA (Earnings before income tax and social contribution, interest, depreciation and amortization and nonoperating income (expense), net

10.643 12,52

32.261 62,57

10.643

Income before income tax and social contribution Financial income (expense), net (Note 18) Depreciation and amortization Non-operating income (expense), net Equity Initial Public Offering expenses AMOUNT OF EBITDA

31.654 39.857 13.873 (68) 21.711 50.564 157.591

62.504 20.456 12.813 181 26.448 122.402

29.695 56.983 19.047 (60) 50.564 156.229

61.640 42.190 17.987 (129) 121.688

The accompanying explanatory notes are an integral part of the financial information

JBS S.A. Notes to the financial statements for the period of three months ended on March 31, 2007 and 2006 (Expressed in thousands of Reais)
1 Operating Activities
The operations of JBS S.A. and its subsidiaries (the Company) consists of: a) Activities The Company operates slaughterhouses, cold storage and food processing operations for the production of beef, canned goods, fat, animal rations and beef by-products, which are produced in the manufacturing units located in the States of So Paulo, Gois, Mato Grosso, Mato Grosso do Sul, Rondnia, Minas Gerais, Acre and Rio de Janeiro.

The Company distributes its products through centers of distribution located in the States of So Paulo and Minas Gerais. In order to minimize transportation costs, the Company is responsible for the transportation of cattle to its slaughterhouses and the transportation of its export products. The Company has indirect subsidiaries located in England and Egypt, which are responsible for the sales and distribution of the Companys products in Europe, Asia, and Africa.

Swift-Armour Sociedad Annima Argentina (Swift Armour), an indirect wholly-owned subsidiary of the Company, operates slaughterhouses and cold storage facilities for the production of beef, canned goods, fat, animal food and by-products. Mouran Alimentos Ltda.. (Mouran) is a subsidiary, organized in July 2006, and conducts slaughterhouse and cold storage business operations for the production of beef, canned goods, fat, animal rations and beef by-products in its facilities located in the State of So Paulo. JBS Embalagens Metlicas Ltda.. (JBS Embalagens) produces metallic cans in its plant located in the State of So Paulo, which are primarily purchased by JBS S.A.

SB Holdings, Inc. and its subsidiaries, Tupman Thurlow Co., Inc. (Tupman) and Astro Sales International, Inc. (Astro) located in The United States acquired in January 2007, distributes processed beef products in the north-american market. The Company, until December 31, 2006, operated also in the hygiene and cleaning products segment, manufacturing and selling bar of soap, toilet cleaners, detergents, disinfectants, softeners, pharmaceutical glycerin, coconut soap, multi-functional degreaser and stain remover, shampoos, conditions, deodorant and liquid soap. As described in letter b) the hygiene and cleaning products segment were assigned to Flora Produtos de Higiene e Limpeza Ltda.. as a result of a partial spin-off. b) Corporate reorganization Merger As of March 1, 2006, Friboi Ltda. merged JBS S.A., assuming all of the assets and liabilities of JBS S.A., which prior to this merger was a holding company with an indirect 100% interest in the total capital stock of Swift-Armour. After giving effect to the merger, Friboi Ltda.s capital stock increased from R$7,500 thousand to R$508,135 totaling R$515,635 represented by 515,635,240 quotas.

The following table shows the increase (decrease) in Friboi Ltda.s assets and liabilities resulting from the merger, based on an appraisal report prepared by specialized accountants: R$ 557.997 (64.519) 493.478 775.040 (760.383) 14.657 508.135

Current assets Current Liabilities Working Capital Permanent assets Long-Term Liabilities

Shareholders equity

On March 2, 2006, the quotaholders of Friboi Ltda. approved a proposal to (1) transform Friboi Ltda. into a corporation (Sociedade Annima ), (2) exchange their quotas for 515,635,240 common shares, without par value and (3) change Friboi Ltda.s name to JBS S.A.

Partial spin-off

According to article 229 of Law no. 6404/76 (the Brazilian Corporation Law), the Company has conducted a partial spin-off on December 31, 2006, under which the Companys assets relating to its hygiene and cleaning products division were assigned to Flora Produtos de Higiene e Limpeza Ltda. The following chart describes the items of the Companys balance sheet that were assigned to Flora Produtos de Higiene e Limpeza Ltda. as a result of the partial spin-off:

Current assets Cash Marketable securities Trade accounts receivable from customers Inventories Taxes recoverable Other current assets

43 439.631 53.348 33.842 4.323 9.016 540.203

Current liabilities Loans and financings Trade accounts payable to suppliers Taxes payable other than income taxes Other current liabilities

7.522 16.589 8.187 28.045 60.343

Long-term assets Accounts receivable from related parties Judicial deposits Other investments Fixed assets, net Deferred charges

Long-term liabilities Loans and financings Other Long-term liabilities

265.882 461 6.516 278.600 5.694 557.153 1.097.356

11.669 364 12.033 72.376 1.024.980

Total current and Long-term Liabilities Net assets transferred

Total assets

Total liabilities and transferred net assets

1.097.356

The operating loss recorded by the hygiene and cleaning products division for the period of three months ended on March 31, 2006, is summarized as follows: Net operating sales Cost of goods sold Gross income Operational expenses: General and administrative expenses Selling expenses Operating Loss 77.955 (52.292) 25.663

(15.871) (21.429) (11.637)

Presentation of Financial Information

The individual and consolidated financial statements, were prepared in accordance with the generally accepted accounting principles in Brazil, and they are presented in accordance with NPC rule No. 27 issued by the Brazilian Institute of Independent Auditors (Instituto dos Auditores Independentes do Brasil - IBRACON) and rule No. 488 issued by the Brazilian Securities and Exchange Commission (Comisso de Valores Mobilirios CVM) , both dated October 3, 2005. With respect to the Companys investment in Swift Armour, we have compared the generally accepted accounting principles in Argentina with the corresponding principles in Brazil applied by the Company, and we have noted that there were no material differences. The accounting principles adopted by the Companies Tupman and Astro, both subsidiaries of SB Holdings, Inc., do not differ significantly from those adopted in Brazil. The individual and consolidated statements of income for the three-month period ended in March 31, 2006, presented for comparability purposes, were prepared excluding the net income of the hygiene and cleaning products division, which was separated from the Company through a partial spin-off occurred in December 31, 2006, as explained in Note 1. Accordingly, such statements of income are denominated as "Pro Forma".

The "Pro Forma" statements of income are not entitled to be used as a basis for the calculation of dividends, nor for any other purpose rather than to provide comparable information about the financial performance of the Company.

Significant Accounting Policies

The significant accounting policies adopted by the Company in preparing its financial statements are described below:

a) Accounting Estimates

The preparation of financial statements in accordance with generally accepted accounting principles in Brazil requires the Companys management to (i) make estimates and assumptions that affect the reported amounts of assets and liabilities and (ii) disclose (a) contingent assets and liabilities as of the date of the financial statements and (b) the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. b) Swap Receivables or Payables The market value of derivative instruments is computed daily, and the resulting receivables or payables are recorded based on their fair market value. c) Allowance for Doubtful Accounts Allowance for doubtful accounts is computed based on the probable loss, the profile of the clients, overall economic and financial condition and specific risks relating to the relevant client. The Companys management believes that the allowance for doubtful accounts is sufficient to cover the losses if such allowances materialize. d) Inventories The Companys inventories are valued based on their cost of acquisition or production, which is lower than their market or net realizable value.

e) Investments The Companys investments in subsidiaries are accounted according to the equity method. Other investments of the Company are valued at their acquisition cost. f) Fixed Assets Fixed assets are stated at an amount equivalent to the sum of their historical acquisition cost and to the amount resulting from the increase in the value of these assets as determined by revaluations performed by independent appraisal firms. Depreciation is computed pursuant the straight-line method, at the rates described in Note 11, which take into account the useful and economic lives of the assets. g) Other Current and Long-term Assets Current and long-term assets are accounted for at their realization value, including, if applicable, the related income, charges and monetary variations. h) Current Liabilities and Long-term Liabilities Current and long-term liabilities are accounted for at their known or computed amounts, including, if applicable, the related income, charges and monetary variations. i) Statements of Income The income statement transactions are reported in accordance with the accrual method of accounting. j) Income Tax and Social Contribution Current taxes Provisions for income tax and social contribution are based on rates and laws and regulations in force. Deferred taxes The Company records deferred income tax assets and liabilities based on temporary differences between the carrying amounts on the Company's financial statements and the tax basis of assets and liabilities. k) Supplemental information In order to provide a better understanding of its financial statements, the Company has presented, as supplementary information, its consolidated statements of cash flows. l) Consolidation

All balances of assets and liabilities accounts of JBS S.A. and its subsidiaries and revenues and expenses from transactions between JBS S.A. and its subsidiaries were eliminated. No inter-company profits were recorded on the consolidated balance sheet of the Company. Accordingly, the shareholders equity of JBS S.A. individually is equal to its consolidated shareholders equity. The financial statements of the subsidiaries of JBS S.A. located outside of Brazil were originally prepared using the currency of the country in which they are located. Subsequently, these amounts were converted into Reais using the applicable commercial selling exchange rates reported by the Central Bank of Brazil on the date of the consolidated balance sheet. The subsidiaries companies included in the consolidation are mentioned in the Note 10.

Cash and cash equivalents

The balance of cash and cash equivalents as of March 31, 2007 includes R$ 1,151,457 relating to the initial public offering of 150,000,000 of ordinary nominative shares at the share price of R$ 8.00 per share, occurred in March 28, 2007, and whose financial settlement was in April 2, 2007.

Marketable Securities
Company 31.03.07 Certificates of bank deposits - CDB-DI Investment funds Certificates of deposits - CD 142.389 63.724 206.113 31.12.06 135.865 9.481 145.346 Consolidated 31.03.07 142.390 94.679 9.872 246.941 31.12.06 135.906 9.481 47.055 192.442

Certificates of bank deposits-CDB-DI are fixed income securities that provides yield of approximately 100% of the Brazilian interbank rate, and certificates of deposit-CD provide a yield equal to exchange rate variation plus a spread of 3.5% per year. The Investment Funds are supported by applications in Multi-Market funds.

Trade Accounts Receivable from Customers

Company 31.03.07 Receivable not yet due Overdue receivables: From 1 to 30 days From 31 to 60 days From 61 to 90 days Above 90 days Allowance for doubtful accounts 6.670 7.501 6.025 2.032 (3.819) 18.409 708.215 4.524 862 8.083 5.106 (2.015) 16.560 665.782 30.377 17.253 8.545 3.751 (6.333) 53.593 747.879 4.525 862 8.083 5.106 (2.163) 16.413 692.819 689.806 31.12.06 649.222 Consolidated 31.03.07 694.286 31.12.06 676.406

Inventories
Company 31.03.07 Finished products Work-in-progress Raw-materials Warehouse spare parts 587.816 12.333 31.615 631.764 31.12.06 513.607 18.286 32.042 563.935 Consolidated 31.03.07 698.661 7.859 44.596 33.900 785.016 31.12.06 578.508 3.739 40.884 34.373 657.504

Recoverable Taxes
Company 31.03.07 31.12.06 ICMS (value added tax) IPI (excise tax) PIS and COFINS (social contribution on net income) IRRF (withholding income tax) IVA (Argentinian value added tax) Others 240.680 118.648 80.718 21.468 20 461.534 Current and Long-term: Current Long-term 220.732 117.737 89.836 20.762 3 449.070 Consolidated 31.03.07 31.12.06 263.081 181.507 90.562 24.103 11.033 9.745 580.031 240.688 221.357 96.698 23.397 9.066 10.810 602.016

437.405 24.129 461.534

424.941 24.129 449.070

546.361 33.670 580.031

567.264 34.752 602.016

ICMS (value added tax)

Brazilian law authorizes manufacturers of goods to set off the ICMS tax paid upon the purchase of raw materials against the taxes charged upon the sale of the finished goods manufactured with such raw materials. Recoverable ICMS derives from tax credits received by the Company in connection with ICMS taxes paid upon its purchase of raw-materials, packaging materials and other goods, which are offset against ICMS taxes resulting from the sale of the Companys products. As export sales are exempt from ICMS and a relevant portion of the Companys sales are export sales, a tax credit is generated.

The Tax Authority of the State of So Paulo (Secretaria da Fazenda do Estado de So Paulo ) filed administrative proceedings against the Company challenging the amount of the Companys ICMS tax credits arising from the purchase of cattle by the Company in other Brazilian states. The Tax Authority of the State of So Paulo claims that the tax incentives granted by such other states were not based upon an agreement with the State of So Paulo, and accordingly, the Tax Authority of the State of So Paulo only recognizes the Companys ICMS tax credits up to the amount of the ICMS tax paid in such other states.The Companys management believes that its accounting of the ICMS tax credit is in accordance with Brazilian law, and expects to be reimbursed for a significant part of such credit during 2007. IPI (excise tax)

IPI tax credits are generated as a result of social contributions (PIS and COFINS) included in the acquisition cost of rawmaterials, packaging and other materials used in the manufacturing of the Companys products, which are offset against the IPI tax paid by the Company upon the sale of finished products. Due to the fact that the exports of the Companys products are exempt from IPI, a tax credit is generated. These tax credits were reviewed and approved by the Federal Tax Authority (Secretaria da Receita Federal ). The Company expects to be reimbursed for these tax credits during 2007. PIS and COFINS (social contribution on net income) PIS and COFINS tax credits are generated as a result of PIS/COFINS taxes paid by the Company upon its purchase of rawmaterials, packaging and other materials used in the manufacturing of its products against the PIS/COFINS taxes paid by Company upon the sale of its finished products. Similarly to ICMS and IPI, as exports of the Company's products are exempt from such taxes, a tax credit is created. An amount of R$ 46,000 of these tax credits were reviewed and approved by the Federal Tax Authority. The Company expects to be reimbursed for these tax credits during 2007. IRRF (withholding income tax)

IRFF corresponds to withholding income tax levied upon the redemption of marketable securities by the Company. The Company expects to set off such withholding income taxes against income taxes on net income paid for the applicable period.

10

General comments Based upon final administrative decisions by the Cmara Superior do Conselho de Contribuintes and on the opinion of its legal counsels, the Company and JBS Embalagens has performed a monetary adjustment of its tax credits of PIS, COFINS and IPI based on the SELIC rate (which is the reference rate published by the Central Bank of Brazil). After such monetary adjustments, the total PIS, COFINS and IPI tax credits totaled R$133,803 on March 31, 2007.

Related parties transactions

Transactions with related parties are mainly represented by sales operations from the parent company to its subsidiaries abroad, under normal market prices and terms, and by inter-company loans with controlled and related subsidiaries with an interest rate of 1% per month. Balances between related parties in the balance sheet and income statement are the following:
Trade accounts receivable Trade accounts payable

2007

Purchases

Sales of products

Mutual contracts

Mouran Alimentos Ltda. JBS Embalagens Metlicas Ltda. JBS Global Beef Ltd. Friboi Egypt JBS Holding International S/A Friboi Investments Ltd. Friboi UK Swift Armour Sociedad Annima Argentina East Forward Ltd. The Tupman Thurlow Co.

2.122 4.281 49.219 12.144 13.949 22.960

83 2.559 180 -

233 13.876 1.078 -

4.577 9.441 27.106 9.080 13.344

6.899 75.352 (48.184) -

104.675

2.822

15.187

63.548

34.067

2006

Trade accounts receivable

Trade accounts payable

Purchases

Sales of products

Mutual contracts

Mouran Alimentos Ltda. JBS Embalagens Metlicas Ltda. JBS Global Beef Ltd. Friboi Egypt JBS Holding International S/A Friboi Investments Ltd. Friboi UK Swift Armour Sociedad Annima Argentina East Forward Ltd. The Tupman Thurlow Co.

451 7.822 41.675 13.728 -

68 2.770 411 -

956 -

26.102 4.336 16.754

3.249 103.944 (50.360) 10.690 -

63.676

3.249

956

47.192

67.523

11

10 Investments in subsidiaries
a) Relevant information about subsidiaries

2007 JBS Emb. Metlicas Ltda. Friboi Investments S. A. JBS Holding Int. S. A. JBS Global A/S (Dinamarca) Mouran Alimentos Ltda. Beef Snacks do Brasil Ltda. SB Holding, Inc

Company's share quantity

Participation

Capital stock

Shareholders' equity

Net income (loss)

9.902 19.000 391.459 200 84 22.735 20

99,00% 100,00% 100,00% 100,00% 70,00% 100,00% 100,00%

2 38.958 391.459 29.578 120 22.597 10

41.252 50.739 313.422 71.140 (5.645) 22.597 2.738

454 3.709 (23.755) (1.243) (1.788) 380

2006 JBS Embalagens Metlicas Ltda. Friboi Investments S. A. JBS Holding Int. S. A. JBS Global A/S (Dinamarca) Mouran Alimentos Ltda. Beef Snacks do Brasil Ltda. SB Holding, Inc b) Investments movement

Company's share quantity

Participation

Capital stock

Shareholders' equity

Net income (loss)

9.902 19.000 282.010 180.000 84 9.900 -

99,00% 100,00% 99,99% 100,00% 70,00% 99,00% -

2 40.622 282.010 9.279 120 10 -

40.798 49.038 227.728 53.355 (3.857) -

34.213 11.915 (34.012) 44.080 (3.977) -

Balance as of December 31, 2006

Addition (realization)

Exchange rate variation

Equity

Balance as of March 31, 2007

JBS Embalagens Metlicas Ltda. Friboi Investments S. A. JBS Holding Int. S. A. JBS Global A/S (Dinamarca) Mouran Alimentos Ltda. Beef Snacks do Brasil Ltda. SB Holding, Inc Total c) Goodwill

40.390 49.039 227.728 53.355 (2.700) 10 367.822

(2.050) 109.449 20.602 22.587 24.333 174.921

(2.010) (1.574) (988) (4.572)

449 3.710 (23.755) (1.243) (1.252) 380 (21.711)

40.839 48.689 313.422 71.140 (3.952) 22.597 23.725 516.460

In January, 2007 the Company acquired 100% of the capital stock of SB Holdings, Inc., and paid a goodwill of R$ 20,987 based on the expectation of future profits of the subsidiary. The goodwill will be amortized as long as such profits are earned, in a period not exceeding 10 years.

12

11 Property, plant and equipment

Company Net amount
Annual Depreciation Rates

Cost

Revaluation

Accumulated Depreciation

31.03.07

31.12.06

Buildings Undeveloped land and lands Machinery & equipment Installations Computer equipment Vehicle and airplanes Construction in progress Others

3,92% 0,00% 10,37% 7,88% 18,45% 19,54% 0,00% 10,00%

288.400 76.732 196.944 71.356 11.014 74.864 196.490 12.867 928.667

116.746 9.352 44.640 21.823 850 392 4.303 198.106

(14.396) (29.389) (9.804) (4.017) 30.218 (4.948) (32.336)

390.751 86.084 212.195 83.375 7.847 45.038 196.490 12.222 1.034.002

382.523 79.835 211.720 84.804 7.899 34.618 85.659 12.118 899.176

Consolidated Net amount

Annual Depreciation Rates

Cost

Revaluation

Accumulated Depreciation

31.03.07

31.12.06

Buildings Undeveloped land and lands Machinery & equipment Installations Computer equipment Vehicle and airplanes Construction in progress Others

3,92% 0,00% 10,37% 7,88% 18,45% 19,54% 0,00% 10,00%

434.434 79.717 524.683 71.369 11.340 76.376 281.161 17.081 1.496.161

116.746 9.352 44.640 21.823 850 392 4.303 198.106

(56.528) (273.426) (9.805) (4.030) (31.340) (7.596) (382.725)

494.652 89.069 295.897 83.387 8.160 45.428 281.161 13.788 1.311.542

493.743 83.060 306.255 84.816 8.041 34.972 96.052 18.279 1.125.218

During the last three years, supported by appraisal reports from SETAPE- Servios Tcnicos de Avaliaes do Patrimnio e Engenharia S/C Ltda., the Company made an appraisal of its facilities, resulting in an increase in the value of these assets, and the creation of the revaluation reserve and the related deferred income tax and social contribution provisions. As of March 31 2007, the balance of the Companys revaluation of fixed assets account was R$198,106, the balance of the Company revaluation reserve account was R$129,199, and the balance of the Company income tax and social contribution account was R$61,984. The Company recorded accrued depreciation of R$6,923 with respect to the Companys revaluation of fixed assets as of March 31, 2007. Other revaluations of fixed assets are scheduled to occur between 2007 and 2010, in conformity with the rules issued by IBRACON and the Rule No. 183/95 issued by CVM.

13

12 Trade accounts payable to suppliers

Company 31.03.07 Commodities Materials and services Finished products 187.085 164.091 3.805 354.981 31.12.06 188.963 77.736 4.761 271.460 Consolidated 31.03.07 206.020 181.534 28.252 415.806 31.12.06 214.218 84.618 10.428 309.264

13

Loans and financings

Company
Modality

Annual average rate of interest and commissions

31.03.07

31.12.06

Financing for purchase of fixed assets FINAME / FINEM - Enterprise financing FINIMP - Import financing agency Loans for working capital purposes Exchange rate variation and interest rate of 5% TJLP and interest rate of 6,13% Exchange rate variation and fixed interest rate of 9,375% CDI and interest rate of 2% Exchange rate variation and interest rate of Libor + 2,1% Exchange rate variation and fixed interest rate of 10,5% CDI and interest rate of 2% TJLP and interest rate of 5,5% TJLP-UMBNDES index rate and interest rate of 5% Exchange rate variation and interest rate of 5% 256.960 256.960 250.785 12.492 263.277

ACC - Exchange advance contracts EXIM - BNDES export credit facility Fixed Rate Notes with final maturity in February 2011 (Eurobonds) Working Capital

99.020 514.520

550.452

571.349 -

597.224 1.052

Export prepayment

250.581

275.046

Fixed Rate Notes with final maturity in February 2016 (144-A) NCE / COMPROR PROGEREM

625.341 532.483 2.593.294

673.256 229.198 29.600 2.355.828 2.619.105

Total Loans and Financings Current and Long-term Current Long-term

2.850.254

981.276 1.868.978 2.850.254

579.128 2.039.977 2.619.105

14

Long-term installments have the following maturities: 2008 2009 2010 2011 2012 2016 386.117 178.079 105.202 584.355 105 615.120 1.868.978 507.165 179.535 105.747 606.130 641.400 2.039.977

Consolidated
Modality

Annual average rate of interest and commissions

31.03.07

31.12.06

Financing for purchase of fixed assets FINAME / FINEM - Enterprise financing FINIMP - Import financing agency TJLP-UMBNDES index rate and interest rate of 5% Exchange rate variation and interest rate of 5% 256.960 256.960 Loans for working capital purposes Exchange rate variation and interest rate of 5% TJLP and interest rate of 6,13% Exchange rate variation and fixed interest rate of 9,375% CDI and interest rate of 2% Exchange rate variation and interest rate of Libor + 2,1% Exchange rate variation and fixed interest rate of 10,5% CDI and interest rate of 2% TJLP and interest rate of 5,5% 250.785 12.492 263.277

ACC - Exchange advance contracts EXIM - BNDES export credit facility Fixed Rate Notes with final maturity in February 2011 (Eurobonds) Working Capital

99.020 514.520

550.452

571.349 76.264

597.224 75.562

Export prepayment

250.581

275.046

Fixed Rate Notes with final maturity in February 2016 (144-A) NCE / COMPROR PROGEREM

625.341 548.375 2.685.450

673.256 229.198 29.600 2.430.338 2.693.615

Total Current and Long-term Current Long-term

2.942.410

1.073.432 1.868.978 2.942.410

653.638 2.039.977 2.693.615

15

Long-term installments have the following maturities: 2008 2009 2010 2011 2012 2016 386.117 178.079 105.202 584.355 105 615.120 1.868.978 507.165 179.535 105.747 606.130 641.400 2.039.977

Exchange Contract Advances (ACCs) are credits funded by financial institutions to JBS S.A., amounting to US$ 48,293 on March 31, 2007 and are used to finance Companys export sales. Outstanding amounts of export pre-payment loans were US$ 117,203 as of March 31, 2007 and US$128,646 as of December 31, 2006. Such loans were funded by financial institutions. PROGEREM is a financing program of the Brazilian National Economic and Social Development Bank (Banco Nacional de Desenvolvimento Econmico e Social BNDES) established to fund the expansion of industrial capacity and to foster the social benefits arising from such expansion. NCE (Notas de Crdito Exportao) /COMPROR are an export finance credit facility linked to COMPROR used to finance the purchase of raw materials used in the Company's export products.

The financings provided by BNDES are secured by fixed assets. The ACC's are secured by export contracts.

EUROBONDS - JBS S.A. issued 9.375% fixed rate notes due on 2011 in total aggregate amounts of US$200 million on February 6, 2006 and US$75 million on February 14, 2006. These notes are secured by JBS S.A. and J&F Participaes S.A.

144-A - JBS S.A. also issued the 10.5% fixed rate notes due on 2016 in the total aggregate amount of US$300 million on July 28, 2006. These notes are also secured by the Company and by Flora Produtos de Higiene e Limpeza Ltda.

14 Payroll and Taxes Payable

Company 31.03.07 31.12.06 Payroll and related social charges Accrual for labor liabilities IRRF (Withholding income tax) Social contribution payable - CSLL ICMS taxes payable Others 37.573 27.379 6.839 2.463 14.626 1.586 90.466 40.333 21.835 9.786 1.188 73.142 Consolidated 31.03.07 31.12.06 48.849 27.721 6.839 2.463 14.629 13.544 114.045 49.799 21.943 9.790 2.915 84.447

16

15 Contingencies
The Company and its subsidiaries are parties in several legal and administrative proceedings arising from the ordinary course of their respective businesses, including labor proceedings, civil proceedings and tax proceedings based on the estimative of its legal advisors. The Company has established provisions in its financial statements for the contingencies arising from these proceedings based on the estimates provided by its legal advisors. The table below sets forth the main information about the legal and administrative proceedings as of March 31, 2007: Company Number of lawsuits/admi nistrative proceedings 752 795 212 1.759 Consolidated

Type of Proceedings Labor Civil Tax Total Tax Proceedings

Provision 4.869 13.290 31.409 49.568

Provision 10.280 13.290 31.897 55.467

a) ICMS - Value Added Tax (Imposto sobre Operaes Relativas Circulao de Mercadorias e sobre a Prestao de Servios de Transporte Interestadual e Intermunicipal e de Comunicao)

The Tax Authority of the State of So Paulo (Secretaria da Fazenda do Estado de So Paulo ) filed several administrative proceedings against the Company, under which the Tax Authority challenges the amount of the Companys ICMS tax credits arising from the purchase of cattle by the Company in other Brazilian states. The Tax Authority of the State of So Paulo claims that the tax incentives granted by such other states were not based upon interstate agreements, and accordingly, the Tax Authority of the State of So Paulo only recognizes the Companys ICMS tax credits up to the amount of the ICMS tax paid in such other states. The Company estimates that the claims under these administrative proceedings amount to R$ 22,276 in the aggregate. In addition to presenting its defense in such administrative proceedings, the Company has filed legal proceedings seeking the payment of damages from such other states if the Tax Authority of the State of So Paulo prevails in these administrative proceedings. Based on the opinion of the Companys legal counsels, the Companys management established a provision for losses arising from such administrative and legal proceedings in the amount of R$ 1,338 as of March 31, 2007.

b) PIS (Programa de Integrao Social) and COFINS (Contribuio para Financiamento da Seguridade Social) The Company has filed administrative proceedings challenging the calculation method used in the assessment of PIS and COFINS by the Federal Tax Authority (Secretaria da Receita Federal ). The Companys management estimates that the contingencies arising from these legal proceedings amount to R$6,969 in the aggregate. Based on the opinion of the Companys legal counsels and recent decisions granted by the Brazilian Federal Supreme Court (Supremo Tribunal Federal ), the Companys management has recorded a provision for losses arising from such legal proceedings in the amount of R$2,065 as of March 31, 2007. c) CSLL - Social contribution on net profit (Contribuio Social sobre o Lucro Lquido)

Based on an amendment to the Brazilian Federal Constitution that exempted revenues from exports from federal contributions, the Company has filed a lawsuit against the Federal Tax Authority (Secretaria da Receita Federal ) seeking to exclude its revenues from exports from the calculation of the Social Contribution on Net Profit (Contribuio Social Sobre o Lucro Lquido CSLL) payable by the Company. Although there are no judicial precedents supporting the exclusion of revenues from exports from the calculation of CSLL, the Company has historically excluded these amounts from the calculation of the CSLL payable by it. Despite the Companys management belief that the Company will prevail in these proceedings, the Companys management has established a provision for losses arising from these lawsuits in the amount of R$16,596 as of March 31, 2007.

17

d) INSS - National Social Security Institute (Instituto Social de Seguridade Social)

In June 2002, the INSS filed two administrative proceedings (autos de infrao ) against the Company, seeking to collect certain social security contributions (which are referred to as contributions to the Rural Workers Assistance Fund (NOVO FUNRURAL) in the aggregate amount of R$69,194, that the Company should have allegedly withheld in connection with purchases of cattle from individual ranchers. As a result of a decision by a lower court in a proceeding to adjudicate a writ of mandamus action filed by the Company in order to challenge the constitutionality of such social security contributions, the administrative proceedings have been stayed and the INSS has been enjoined from collecting these social security contributions from the Company.

The INSS has not timely appealed from this decision and, accordingly, the proceeding has been submitted to the review of the Regional Federal Court of the 3rd Region as a matter of law. Currently, the proceedings await a ruling by such appellate court. Based on the Companys legal counsel opinion supported by precedents of the Federal Supreme Court in a similar case, the Companys management believes that the Company will prevail in these proceedings. Accordingly, the Company has not established any provision for contingencies arising from these proceedings.

In order to preserve its claims under the administrative proceeding and to avoid the lapse of the applicable statute of limitations period relating to these claims, the INSS sent the Company tax default notices (notificaes fiscais de lanamento de dbito ) with respect to the contributions allegedly owed by the Company for the period from January 1999 to December 2003 in the aggregate amount of R$69,194. In its defense to these default notices, the Company argued that it did not pay the contributions with respect to the period described in such notices in light of the favorable decision issued by the trial court reviewing the writ of mandamus action, which ordered the stay of the administrative proceedings and enjoined the INSS from collecting the contributions from the Company until a final decision is reached under such action.

An ongoing legal proceeding arguing the unconstitutionality of the contribution to the Rural Workers Assistance Fund, with issues and factual circumstances similar to the writ of mandamus action is currently under review by the Brazilian Federal Supreme Court (Supremo Tribunal Federal ). Up to the present moment, five of the ten judges opining on this proceeding have voted to declare this contribution unconstitutional and no judge has issued a dissenting opinion on this matter.

Based on this and other precedents and on the opinions of its external legal counsel, the Companys management believes the Company will prevail in these proceedings. Accordingly, the Companys management has not established any provision for contingencies arising from these proceedings as of December, 31, 2006. Currently, the Company does not pay or deposit with any court any amounts in connection with contributions to the Rural Workers Assistance Fund.

Social Security Contributions Third-party Entities. The INSS filed several administrative proceedings against the Company with claims totaling approximately R$11,000, seeking to collect certain social security contributions with respect to third-party entities (contribuies previdencirias terceiras entidades ) allegedly owed by the Company. These proceedings are based on a wrongful interpretation by the INSS of the Social Security Fund Code (Cdigo do Fundo de Previdncia e Assistncia Social ). Based on the opinion of the Companys external legal counsel, the management of the Company believes the Company will prevail in these proceedings. Accordingly, the management of the Company has not established any provision for contingencies arising from these proceedings as of December, 31, 2006. e) Other Tax Proceedings The Company is also party of other 100 tax lawsuits and administrative proceedings. Contingencies arising from these proceedings are not material to the Company if considered on an individual basis. Set forth below are the details of these proceedings: * proceeding filed against the Company with claims totaling R$1,071, seeking to collect certain taxes allegedly owed by the Company in connection with the irregular remittance of goods by the Company to the Manaus Free Trade Area (Zona Franca de Manaus ); proceeding filed against the Company with claims totaling R$845, seeking to collect contributions to the National Service of Industrial Learning (Servio Nacional de Aprendizagem Industrial - SENAI) allegedly owed by the Company;

18

* proceeding filed against the Company with claims totaling R$2,277, seeking to collect amounts allegedly owed by the Company in connection with tax credits for fuel used in the transportation of cattle to slaughterhouses; *

proceeding filed against the Company with claims totaling R$1,243, seeking to collect amounts allegedly owed by the Company with respect to an irregular invoice for the sale of certain products of the Company; proceeding filed against the Company with claims totaling R$453, seeking to collect amounts allegedly owed by the Company for not presenting evidence of the delivery of products sold by the Company to the applicable tax authority; other administrative tax proceedings with individual claims in amounts below R$200, which total R$5,521 in the aggregate.

Labor Proceedings As of March 31, 2007, the Company was party to (i) 671 labor lawsuits and 79 administrative proceedings (autos de infrao ) filed by the Regional Labor Offices (Delegacias Regionais do Trabalho ) involving claims in the total aggregate amount of R$16,561 and (ii) two administrative proceedings filed by the Labor Department of Justice (Ministrio Pblico do Trabalho ) involving claims in the total aggregate amount of R$258. Based on the opinion of the Companys external legal counsel, the Companys management recorded a provision in the amount of R$4,869 for losses arising from such proceedings as of March 31, 2007. Most of these lawsuits were filed by former employees of the Company seeking overtime payments and payments relating to their exposure to health hazards. Approximately 8,0% of these lawsuits were filed by employees of third-party companies that provide outsourced services to the Company. Pursuant to Brazilian labor laws, the Company is jointly liable for failure of these third-party companies to comply with applicable labor laws. Civil Proceedings a) Slaughterhouse at Araputanga In 2001, the Company (formerly known as Friboi Ltda.), entered into a purchase agreement for the acquisition of one slaughterhouse located in the City of Araputanga, State of Mato Grosso, from Frigorfico Araputanga S.A. (Frigorfico Araputanga) for an aggregate purchase price of approximately R$36 million. As a result of the payment of the purchase price by the Company and the acknowledgement by Frigorfico Araputanga of compliance by the Company with its obligations under the purchase agreement, a public deed reflecting the transfer of title of the slaughterhouse from Frigorfico Araputanga to the Company was registered with the applicable real estate notary.

As (i) Frigorfico Araputanga was a beneficiary of certain tax benefits granted by the Federal Government through an agency responsible for fostering the development of the northern region of Brazil (Superintendncia de Desenvolvimento da Amaznia SUDAM) and (ii) [the slaughterhouse sold to the Company was granted by Frigorfico Araputanga to SUDAM as collateral for these tax benefits the consent of SUDAM was required for the registration of the public deed with the applicable real estate notary. In June 2004, Frigorfico Araputanga S.A. filed a lawsuit against the Company in a state court located in the City of Araputanga, State of Mato Grosso, alleging that the Company breached the purchase agreement and seeking an injunction to prevent the Company from finalizing the transfer of the slaughterhouse and a declaratory judgment that the purchase agreement and the public deed registered with the real estate notary were null and void.

19

In the lawsuit, Frigorfico Araputanga claimed that the sale of the slaughterhouse should be nullified as the Company did not obtain the consent of SUDAM in order to register the public deed with the applicable real estate notary. In January 2005, the court of appeals (Tribunal de Justia do Mato Grosso ) held that the Company had complied with all material terms of the purchase agreement. The lawsuit was subsequently submitted to the review of the Federal Court of Cceres, under No. 2005.36.01.001618-8, in light of the inclusion of the Federal Government as a party to the lawsuit. The Company obtained the consent of Unidade de Gerenciamento dos Fundos de Investimento - UGFIN, the successor of SUDAM, and this consent was declared valid by the Federal Regional Court of the 1st Region (Tribunal Federal da 1 Regio ) under Proceedings No. 2006.01.00.024584-7 and 2006.01.00.019052-8.

As a result, the Company successfully registered the public deed transferring title of the slaughterhouse from Frigorfico Araputanga to the Company with the real estate registry. This proceeding remains pending until court-appointed accounting experts confirm the amount of the payments made in connection with the proceeding and certain appeals are reviewed by the applicable appellate courts. Based on the opinion of the Companys legal counsel, supported by precedents of the Federal Brazilian Supreme Court (Supremo Tribunal Federal ) and the Brazilian Superior Court of Justice (Superior Tribunal de Justia ), the Companys management believes that the Company will prevail in these proceedings. Accordingly, the Companys management has not established any provision for contingencies arising from these proceedings. b) Trademark Infringement In July 2005, Frigorfico Araputanga also filed a lawsuit against the Company seeking damages in the amount of R$26,900 and punitive damages in the amount of R$100,000 for the use by the Company of the trademark Frigoara without Frigorfico Araputangas consent. The amounts of the claim were based upon a report presented by Frigorfico Araputanga to the trial court, which appraised the value of the trademark Frigoara at R$315,000.

The Company presented its defense against this lawsuit alleging that (i) the lawsuit should be analyzed and reviewed together with the lawsuit relating to the purchase of the slaughterhouse from Frigorfico Araputanga by the Company, (ii) the trademark Frigoara was used by the Company for a limited period of time, with the written consent and upon the request of Frigorfico Araputanga (the use of the trademark by the Company was a requirement of SUDAM to consent to the registration of the public deed contemplating the transfer of the slaughterhouse from Frigorfico Araputanga to the Company) and (iii) the amount of any damages under the lawsuit should be limited to a percentage of products sold by the Company under the trademark Frigoara, pursuant to article 208 of the Intellectual Property Law. Almost all of the products manufactured by the Company were marketed under the trademark Friboi. The only product marketed by the Company under the trademark Frigoara was minced meat, in limited amounts.

In light of the foregoing, the Companys management established a provision for losses arising from this lawsuit in the amount of R$600 as of December 31, 2006. Following a determination of the judge of the trial court, the lawsuit was submitted to the review of the Federal Court of Cceres on January 17, 2007. The judge of the Federal Court of Crceres determined that this lawsuit be joined with the lawsuit relating to the purchase of the slaughterhouse by the Company from Frigorfico Araputanga. The Federal Government will be notified to issue an opinion on the matter under discussion in this lawsuit. Based on the Companys legal counsel opinion supported by precedents of the Federal Brazilian Supreme Court (Supremo Tribunal Federal ) and the Brazilian Superior Court of Justice (Superior Tribunal de Justia ), the Companys management believes that the Company will prevail in these proceedings.

20

c) Administrative Council of Economic Defense (Conselho Administrativo de Defesa Econmica), or CADE In 2005, the Economic Law Secretariat (Secretaria de Direito Econmico ) initiated administrative proceedings against 11 Brazilian beef processing companies, including the Company (formerly Friboi Ltda.) and other large beef producers. The proceedings relate to allegations made by the Brazilian Confederation of Agriculture and Cattle Raising (Confederao da Agricultura e Pecuria do Brasil ) that these beef companies may have breached Brazilian antitrust regulations by entering into agreements to establish the price of cattle purchased by them for slaughter. The SDE submitted these proceedings to the review of the Brazilian Antitrust Authority (Conselho Administrativo da Defesa Econmica CADE) with a recommendation to impose fines on the beef producers which are party to the proceedings. If CADE ultimately confirms such recommendation, CADE may impose administrative penalties on the Company in accordance with articles 23 and 24 of Law No. 8,884/84, including an administrative fine that may range from 1.0% to 30.0% of the Companys annual gross revenues for the years prior to the proceeding. Based on the evidence presented in connection with these proceedings and on the arguments of its defense (that will be presented together with the opinion of a renowned Economics professor), the Companys management believes that CADE will grant the Company a favorable decision under these proceedings. In particular, the Company believes that there can be no standard discount prices for cattle carcass. Based on the opinion of the Companys legal counsel supported by favorable domestic and international precedents, the Companys management believes that the Company will prevail in these proceedings. Accordingly, the Companys management has not established any provision for contingencies arising from these proceedings. d) Accidents in the Workplace At December 31, 2006, the Company was party to several civil lawsuits, under which certain of the Companys former and current employees are seeking damages from accidents that occurred in the workplace, in amounts varying based on their salaries. Based on the opinion of the Companys legal counsel, the Companys management recorded a provision for losses arising from these lawsuits in the amount of R$12,690 as of March 31, 2007.

16

Income tax and social contribution

Income tax and social contribution are recorded based on taxable net income pursuant to the rates set forth in the applicable laws. Deferred income tax and social contribution are recorded based on the temporary differences between the carrying amounts on the Companys financial statements and the tax basis of assets and liabilities, as well as on the tax loss carry forward credits.
a) Reconciliation of income tax and social contribution Company 2007 Income before income tax and social contribution Plus: Equity Accounting Non-deductible expenses Provision for contingencies 31.654 2006 62.504 Consolidated 2007 2006 29.695 61.640

21.711 8.452 2.361 32.524

26.448 26.448

21.711 8.452 2.462 32.625

26.448 26.448

Calculation basis for income tax and social contribution Income tax and CSLL - 34% Actual rate - % Temporary additions: Provision for contingencies Other

64.178 21.814 68,9%

88.952 30.243 48,4%

62.320 22.074 74,3%

88.088 29.395 47,7%

2.361 2.361 803

2.462 4.859 7.321 2.489

Deferred income tax and social contribution

21

b) Deferred income tax and social contribution

Company 31.03.07 31.12.06 Assets: Over provision for contingencies . Current year . Prior years

Consolidated 31.03.07 31.12.06

803 16.050 16.853

16.050 16.050

2.489 23.083 25.572

19.482 4.010 23.492

Liabilities: Over revaluation reserve 61.984 61.984 62.665 62.665 61.984 61.984 62.665 62.665

The Company and its subsidiaries have a track record of future taxable net income. The Company expects to recover the tax credits arising there from within eight years due to the termination of the causes of their contingencies, as follows: Company 31.03.07 31.12.06 413 394 413 394 413 394 413 394 15.201 14.474 16.853 16.050 Consolidated 31.03.07 31.12.06 2.424 2.254 2.424 2.254 2.424 2.255 2.424 2.255 15.876 14.474 25.572 23.492

2008 2209 2010 2011 2012 to 2014

22

17 Shareholders Equity
a) Capital Stock On March 28, 2007, the Company increased its Capital Stock through an initial public offering of 150.000.000 of ordinary nominative shares at the share price of R$ 8,00 per share, being the amount of R$ 39,224 considered as capital increase and R$ 1,160,776 considered as capital reserve (premium on shares issued). The capital stock as of March 31, 2007 is composed by 850.000.000 of ordinary shares, without nominal value (515.635.240 in 2006). The Company is authorized to increase its capital in more 50.000.000 ordinary nominative shares. b) Retained earnings reserves Mandatory Computed based on 5% of the net income of the year. Reserve for expansion It refers to the remaining balance of the net income after the computation of Mandatory reserve and dividend distribution. The purpose of this reserve is to provide funds to investment in assets. c) Revaluation reserve Revaluation reserve reflects the appraisal effected by the Company, net of tax effects that are progressively offset against retained earnings to the same extent that the increase in value of the revalued property is realized through depreciation, disposal or retirement. d) Dividends

Mandatory dividends correspond to 25% of the adjusted net income of the year, according to article 202 of Law 6.404/76.

18

Financial Income (Expense), Net

Company 2007 Financial expenses: Monetary variations Interest Discounts Taxes on financial transactions-CPMF Interest on derivatives Income tax on interest - fixed rates notes with final maturity in February 2011 Income tax on interest - fixed rates notes with final maturity in February 2016 Bank service charges and other expenses Loss in investment funds 2006 Consolidated 2007 2006

(17.418) (76.175) (5.786) (9.585) (52.083) (1.665) (2.390) (777) (14.632) (180.511)

(42.637) (39.171) (15.266) (4.152) (63.127) (965) (165.318)

(37.686) (78.725) (5.786) (9.969) (68.236) (1.665) (2.390) (2.619) (14.632) (221.708)

(68.104) (40.843) (15.266) (4.152) (74.085) (1.088) (203.538)

Financial Income: Exchange and monetary variation Interest Interest on derivatives Discounts Earnings in investment funds

75.702 16.784 36.291 1.823 10.054 140.654 (39.857)

50.364 18.948 73.562 1.988 144.862 (20.456)

85.553 16.948 46.921 1.824 13.479 164.725 (56.983)

53.473 19.039 86.848 1.988 161.348 (42.190)

Net

23

19 Managements Compensation
For the period of three months ended March 31, 2007 and 2006, the aggregate compensation paid by the Company to the Companys management was R$ 990 and R$ 1,295, respectively.

20 Insurance Coverage (unaudited)

The Company adopts the policy of maintaining insurance coverage for property, plant and equipment and inventories that are subject to risks, in the amounts considered sufficient to cover any loss arising from such risks. Due to the multi-location aspect of its business, the Company contracts insurance covering the maximum possible loss per operational unit. The insurance covers the following events: fire, flooding and landslide.

As of March 31, 2007 and 2006 the maximum individual coverage was R$ 99,000, considering all types of risks.

The insurance coverage related to the controlled Company Swift Armour has the same characteristics as explained above, and the maximum coverage as of March 31, 2007 and 2006 was US$ 65,000 (equivalent to R$ 132,633 as of March 31, 2007).

21 Risk Management and Derivative Instruments

The Companys operations are exposed to market risks primarily related to exchange rates, the credit worthiness of its customers, interest rates and cattle prices. These types of risks are monitored by its treasury area, which manages these risks through a system of statistical computation of the Value at Risk (VAR) and its technical committee. This committee is composed of board members and by the Companys financial executives, who monitor the risks, limits on financial positions and overall level of risk exposure. a) Exchange Rate and Interest Rate Risk The exchange rate and interest rate risks related to financings and loans, marketable securities and accounts receivable from clients denominated in foreign currencies are hedged on a transaction by transaction basis, through derivative instruments, such as swap contracts (dollar to CDI or LIBOR to fixed interest rates or vice-versa), futures contracts traded on the Bolsa de Mercadorias e Futuros - BM&F and forward contracts. The notional value of the contracts is only accounted for in memorandum accounts. The results of over-the-counter trades in the futures market and daily adjustments of currency future contracts are made realized and liquidated; on the BM&F, and, as of March 31, 2007, are accounted for as Amounts receivable from or payable to future contracts. The results of over-the-counter trades contracted with a future maturity date are recorded on the balance sheet. b) Credits risks

The Company is exposed to credit risks in respect of accounts receivable from customers, which are partially mitigated through the diversification of the credit profile of the Companys customer portfolio. The Company does not have a client that represents more than 10% of its combined net sales revenue, and its clients have good financial and operating indicators. c) Purchase Price of Cattle

The Company is exposed to volatility with respect to the price of cattle, caused by climate factors, supply, transportation cost and agricultural policies. According to its inventory policy, the Company maintains individual physical control of its livestock, which includes anticipated purchases combined with operations on the future markets.

24

d) Estimated Market Value The assets and liabilities of the Company are accounted for in the consolidated balance sheet and in the pro forma balance sheets of JBS S.A. based on their respective acquisition cost, and the related classification of revenue and expenses in the income statement is accounted for based on its expected fair market or liquidation value.

22

Supplementary information - Cash flows statements

Company "Pro Forma" 2006 2007 Cash from operating activities Net income Items that do not affect cash . Depreciation and amortization . Variation on long-term assets and liabilities . Minority interest . Equity . Write-off of fixed assets . Deferred income tax and social contribution assets . Financial charges of current and long-term assets . Accrual for contingencies 10.643 13.873 6.313 21.711 6.371 (803) (4.572) 2.361 55.897 Variations in operating assets and liabilities . Decrease (increase) in trade accounts receivable from customers . Decrease (increase) in inventories . Decrease (increase) in taxes recoverable . Decrease (increase) in other current and long-term assets . Decrease (increase) in accounts receivable from related parties . Increase (decrease) in trade accounts payable to suppliers . Increase (decrease) in other current and long-term liabilities . Increase (decrease) in income tax and social contribution . Decrease in working capital as a result of partial spin-off Total cash provided by (used in) operating activities Cash used in investing activities . Increase in fixed assets and intangible assets . Increase in investments (42.433) (67.829) (12.464) (9.998) 33.456 8.521 99.608 (681) 64.077 32.261 12.813 11.932 26.448 614 84.068 (65.768) (16.423) (24.215) (12.469) (6.992) (36.889) (63.038) 8.691 (383.975) (517.010) Consolidated "Pro Forma" 2006 2007 10.643 19.047 6.832 1.689 8.474 (2.489) (4.572) 2.462 42.086 (55.060) (127.512) 21.985 (11.148) 31.512 98.955 (681) 137 32.261 17.987 11.932 16 614 62.810 (89.466) (17.998) (34.834) (18.150) (32.918) (50.679) (158) (383.975) (565.368)

(155.070) (139.870)

(797.138) -

(213.311) (20.988)

(797.138) -

Total cash used in investing activities Cash from financing activities . New loans and financings . Payments of loans and financings . Increase in capital stock . Interest attributable to shareholders' equity Total cash obtained from financing activities Net increase (decrease) in cash Cash, cash equivalents and marketable securities at the beginning of the period Cash, cash equivalents and marketable securities at the end of the period

(294.940)

(797.138)

(234.299)

(797.138)

452.285 (227.449) 1.200.000 1.424.836 1.193.973 199.721

1.131.204 (631.018) 508.135 (8.182) 1.000.139 (314.009) 451.054

478.473 (236.510) 1.200.000 1.441.963 1.207.801 261.071

1.131.204 (631.018) 508.135 (8.182) 1.000.139 (362.367) 549.869

1.393.694

137.045

1.468.872

187.502

25

JBS S.A. reports 1Q07 net sales of R$1.1 billion and EBITDA margin of 14.4%
So Paulo, April 25, 2007 JBS S.A. (Bovespa: JBSS3), the largest beef producer and exporter in Latin America and the worlds third largest beef company in terms of slaughtering capacity, announces today the results for the 1Q07. The Companys operating and financial information is presented in Brazilian Reais (R$), in accordance to Brazilian generally accepted accounting principles. Financial statements for the quarter ended March 31, 2006 were prepared for comparability purposes and do not include the results from the operations of the Hygiene and Cleaning division due to the partial spin-off that occurred on December 31, 2006, as explained on the notes to the financial statements. For this reason, the referred financial statements are being denominated as Pro Forma and should not be considered for the purposes dividend calculation or any purposes other than to provide comparable information for the analysis of the Companys operational performance.

Contact IR

PERIOD HIGHLIGHTS
Srgio Longo Director of Finance and IR Andr Menezes IR Manager Email: ri@jbs.com.br Phone: (11) 3144 - 4055 Website:
www.jbs.com.br

Net revenues growth of 22.6% to R$1.1 billion, from R$886.1 million in the same period of last year; Export and domestic net revenues growth of 24.8% and 19.6%, respectively. For the quarter, net revenues from exports reached R$626.0 million from R$501.5 in the 1Q06, while domestic sales reached R$460.2 million from R$384.6 million in the same period of last year; EBITDA growth of 28.4% to R$156.2 million from R$121.7 million in the 1Q06, with a margin of 14.4%; compared to 13.7% in the same period of the previous year; Net income for the quarter decreased by 67.0% to R$10.6 million, compared to R$32.3 million in the 1Q06, mainly due to nonrecurrent expenses related the Companys initial public offering in the amount of R$50.6 million; 58% of net sales for the quarter exported to over 110 countries in 5 continents, although not a individual country was responsible for more than 15% of the companys net export revenues;

1Q07 Conference Call

Date: Thursday, April 26, 2007 > Portuguese 12 p.m. (Braslia Time) 11 a.m. (US ET) Phone: (+55 11) 2101-4848 Replay: (+5511) 2101-4848 > English 1 p.m. (Braslia Time) 12 p.m. (US ET) Phone: +1 (973) 935-8893 Replay: +1 (973) 341-3080 Code: 8707295

26

JBS S.A.

Founded in 1953, JBS is the third largest beef company in the world in terms of slaughtering capacity (22.6 thousand heads/day) and the largest beef producer and beef exporter in Latin America; The Companys net sales have grown at an average rate of 29.5% since 1999, driven by the companys ability to increase slaughtering capacity and sales in the domestic and international markets; In the 1Q07, 58% of net sales for the year exported to over 110 countries in 5 continents, although not a individual country was responsible for more than 15% of the companys net export revenues; Continuous growth in exports, driven by the competitiveness of the Brazilian beef industry and the quality of JBS products quality (an increase in export volumes and revenues of 35.9% and 24.8%, respectively, in comparison to the 1Q06); Strong EBITDA margin of 14.4% in the 1Q07 compared to 13.7% in the 1Q06; Competitive advantages include low cost production, excellent track record in sanitary issues, modern strategically located operations, high distribution capacity and leading presence in both Brazil and Argentina, in the domestic and export markets. Currently, JBS conducts its operations through the following facilities: 19 slaughterhouses located in the states of Acre, Gois, Mato Grosso, Mato Grosso do Sul, Minas Gerais, Rondnia and So Paulo, out of which 5 are also able to process beef; 5 slaughterhouses located in 3 provinces of Argentina (Buenos Aires, Entre Rios e Santa F), out of which 4 are able to process beef; 1 beef canning plant located in the state of Rio de Janeiro; and 1 vegetable canning plant located in the state of Minas Gerais. In terms of logistics, the Company is supported by 4 distribution centers (3 in the state of So Paulo and 1 in the state of Minas Gerais), 1 inland container terminal located near the port of Santos, state of So Paulo, and subsidiaries is Chile, Egypt, the United States, Russia and the United Kingdom, which distribute and market JBS products in those countries. The following map sets forth the location of JBS facilities, as well as the regions in which cattle is raised in Brazil and Argentina:

27

Brazil AC RO Slaughterhouse Slaughterhouse/Processing plant Distribution center Canned vegetables plant Canned beef plant Container terminal JBS operational footprint MT GO MS SP

MG RJ

Head of cattle (in thousands)

2.500 7.500 7.500 12.500 12.500 17.500 17.500 22.500 Over 22.500

Argentina

SUMMARY OF THE PERIOD

During the 1Q07, JBS continued its growth and leadership consolidation in the markets where it operates. The Company posted a substantial increase in revenues, with net sales totaling R$1.1 billion for the quarter, driven by its ability to increase slaughtering capacity and sales, both in the domestic and international markets. It also improved operationally, posting an EBITDA margin of 14.4%, compared to 13.7% in the same period of last year. In accordance to its expansion strategy, and taking advantage of opportunities for consolidation within the sector, as well as the opening and growth of international markets, in January of 2007, JBS, through Swift-Armour Argentina S.A., acquired a plant in Berazategui, Buenos Aires, with a slaughtering capacity of approximately 1,000 heads per day. Also in January of 2007, the Company acquired 100% of the shares of the North American company SB Holdings and its subsidiaries, Tupman Thurlow, Astro Sales International and Austral Foods for US$11.9 million. SB Holdings is one of the largest industrialized beef distributors in the North American market and is the proprietor of the Hereford, Manco Pride and Rip n Ready brands. This recent acquisition provided JBS with direct access to the processed beef market in the United States. On March 19, 2007, the Company entered into a joint venture agreement with Mr. Jay Earl Link, an American entrepreneur in the beef jerky business, pursuant to which each of Mr. Link and JBS will own 50% of a new company that will produce and market beef jerky in Brazil and in the United States.

28

THE BEEF INDUSTRY

According to the USDA, with an estimated 187.7 million heads of cattle in 2007, Brazil has the worlds largest cattle herd for commercial purposes. Over the last 15 years, the Brazilian beef industry has undergone an intense process of internationalization and Brazilian beef exports increased from less than 5% of domestic beef production in the early 1990s to approximately 20.0% in 2006. This has occurred despite the fact that Brazil has access to less than 50.0% of the worlds fresh beef markets, since countries from the Pacific Block such as the US, Canada, Mexico, Japan and South Korea prohibit the importing of fresh beef from Brazil. Brazilian beef exports have grown by 25.7% on average from 2000 to 2006, as a result of: Increased productivity in the Brazilian beef sector and reduced production costs; Expanded marketing and advertising efforts; An increased number of export destinations; and A gradual reduction of sanitary and trade barriers. In spite of sanitary and commercial restrictions imposed by some of the leading beef importing countries, Brazilian exports are expected to continue growing primarily due to: A growth in demand in industrialized and developing countries; A continuous reduction of sanitary barriers; A reduction of cattle herd in Russia and the consequent decrease in its production capacity; A reduction of subsidies to cattle ranchers and exporters in the European Union, which has been negatively affecting its production and increasing its deficit; and Beef imports expected in China as a result of the significant growth in its beef consumption.

BRAZILIAN BEEF MARKET

Brazil offers several competitive advantages in producing beef when compared to its competitors in the international market, which contribute to its consolidation as the worlds leading beef producer and exporter. These competitive advantages include: Low Production Cost: Brazil has the lowest production cost among major global producers; High Growth Potential: Brazil currently has the largest commercial cattle herd in the world and large amounts of available grazing land, with an estimated capacity to sustantially increase its existing cattle herd and beef production; Disease-Resistant Breeding Practices: Unlike most other major beef producers (including the United States and the European Union), Brazilian cattle are grass-fed and/or are provided vegetable-based feed, which is largely viewed as a factor that eliminates the risk of an outbreak of bovine spongiform encephalopathy (commonly referred to as mad cow disease), or BSE,

29

among Brazilian cattle. In addition, Brazilian beef is characterized by its low fat content and lack of use of chemicals and growth hormones (used by other countries), which are key factors used in marketing Brazilian beef, primarily to developed nations; Strong domestic market demand: Brazil has a very large domestic market, which currently consumes approximately 80.0% of its beef production. Domestic market sales increase revenue through an optimization of the value of the carcass, a competitive advantage when compared to other world beef producers;

FINANCIAL HIGHLIGHTS 1Q07

R$ million Net Sales Revenue Domestic Market Exports Gross Profit Gross Margin Net Income Net Margin EBITDA EBITDA Margin

1Q07 1,086.10 460.2 626.0 257.6 23.7% 10.6 1.0% 156.2 14.4%

1Q06 886.1 384.6 501.5 204.4 23.1% 32.3 3.6% 121.7 13.7%

Var.% 22.6% 19.6% 24.8% 26.0% -67.2% 28.4%

Sales Volumes (thousands of tons) Beef Exports Beef Domestic Market Total

103.6 189.2 292.7

76.2 167.9 244.1

35.9% 12.7% 19.9%

(*) Net income for the quarter decreased by 67.0% to R$10.6 million, mainly due to non-recurrent expenses related the Companys initial public offering in the amount of R$50.6 million;

Net Sales Revenue R$ million

Net sales revenue increased by 22.6%, from R$886.1 million in the 1Q06 to R$1.1 billion in the 1Q07, primarily due to a growth of 19.9% in the total sales volume and to an increase in the average sales price compared to the same period of last year. The increase in volume is a result of higher exports for the quarter, which grew by 35.9%, and to a growth of 12.7% in domestic sales in comparison to the same period of last year.

30

Net Net Sales Sales Revenue Revenue (R$ (R$ million) million)
Combined Pro Forma Consolidated
3,968

G CA

: R

% ,5 29

3,577 3,158

1,914

22
1,212 890 650 1,292

,6

1,086 886

1999

2000

2001

2002

2003

2004

2005

2006

1Q06

1Q07

Source: JBS

Export revenues as a percentage of the Companys total net revenues increased from 57% in the 1Q06 to 58% in the 1Q07, while domestic sales accounted for 42% of net revenues, from 43% in the same period of last year, as demonstrated below.

Net Net Revenues Revenues Distribution Distribution 1Q06 1Q06

Net Net Revenues Revenues Distribution Distribution 1Q07 1Q07

Domestic Market 43%

Domestic Market 42% Export 58%

Export 57%

Net Revenues: R$886 millions

Net Revenues: R$1,086 millions

Source: JBS

Source: JBS

31

Beef Domestic Market

Beef Domestic Market

1Q07

1Q06

Var. %

Net Sales Revenue (R$ million) Fresh and Chilled Beef 312.4 Processed Beef 67.3 Others 80.5 TOTAL 460.2 Volume (thousands of tons) Fresh and Chilled Beef Processed Beef Others TOTAL Average Sales Price (R$/kg) Fresh and Chilled Beef Processed Beef Others TOTAL 138.5 12.6 38.1 189.2 2.26 5.34 2.11 2.43

267.4 53.8 63.4 384.6 122.6 9.8 35.5 167.9 2.18 5.47 1.79 2.29

16.8% 25.2% 26.9% 19.6% 12.9% 28.3% 7.4% 12.7% 3.4% -2.4% 18.2% 6.2%

For the 1Q07, JBS reported net revenues in the domestic market of R$460.2 million, a 19.6% increase over the 1Q06. This is primarily due to a 12.7% growth in sales volumes, which rose from 167.9 thousand tons in the 1Q06 to 189.2 thousand tons in the 1Q07, as well as to a growth of 6.2% in average sales prices in comparison to the same period of last year. Fresh beef volumes in the domestic market grew by 12.9% to 138.5 thousand tons, from 122.6 thousand tons in the 1Q06. This growth is attributable to a recovery of average sales price in Brazil during the quarter, which had been affected by the outbreak of the avian influenza that occurred in several countries in 2006. The outbreak of the avian influenza resulted in lower poultry consumption in international markets, reducing poultry exports from Brazilian producers which, having no other alternative, allocated their export production towards the domestic market. With an increase in supply, poultry prices in the domestic market were reduced, pressuring prices of other sources of protein to follow this reduction. Recovering poultry exports from Brazil has decreased the competition between poultry and fresh beef and resulted in an increase of average sales prices, with a consequent growth in fresh beef volumes sold in the domestic market during the period. Processed beef volumes have increased by 28.3% to 12.6 thousand tons in the 1Q07, from 9.8 thousand tons in the 1Q06, primarily due to the launching of a new line of ready-to-eat meals in Brazil in the end of 2006, the entrance of JBS in the foodservice business with product sales to restaurants and an increase in the consumption of the Companys products. As a consequence, processed beef

32

sales as a percentage of total net sales in the domestic market increased from 14% in the 1Q06 to 15% in 1Q07. The average sales price of processed beef has decreased by 2.4% in the 1Q07, mainly driven by the product mix sold throughout the quarter.

Beef Domestic Market Distribution 1Q06 Beef Domestic Market Distribution 1Q06

Beef Domestic Market Distribution 1Q07 Beef Domestic Market Distribution 1Q07

Outros 17%

Outros 18%

Processed Beef 14%

Fresh Beef 69%

Processed Beef 15%

Fresh Beef 67%

Net Revenues: R$384 millions Source: JBS Source: JBS

Net Revenues: R$460 millions

Beef Exports
Beef Exports Net Sales (R$ million) Fresh and Chilled Beef Processed Beef TOTAL Volume (thousands of tons) Fresh and Chilled Beef Processed Beef TOTAL Average Sales Prices (R$/kg) Fresh and Chilled Beef Processed Beef TOTAL Average Sales Prices (US$/kg) Fresh and Chilled Beef Processed Beef TOTAL 1Q07 1Q06 Var. %

436.3 189.7 626.0 73.0 30.5 103.6 5.97 6.21 6.04 2.83 2.95 2.87

322.7 178.9 501.5 48.8 27.4 76.2 6.61 6.54 6.58 3.01 2.97 3.00

35.2% 6.1% 24.8% 49.6% 11.6% 35.9% -9.6% -5.0% -8.2% -5.8% -1.0% -4.3%

JBS net export revenues rose by 24.8% to R$626.0 million compared to R$501.5 million for the 1Q06, despite the appreciation of the Brazilian Real that occurred during the period. This result was mainly driven by increased sales volumes of both fresh and processed beef sold throughout the quarter.

33

The factors that caused the increase in volumes are the following: An increase in exports to the European Union, due mainly to a reduction of subsidies to cattle ranchers and exporters, which has been negatively affecting its production and increasing its deficit; Increased exports to Russia due to a gradual reduction of its cattle herd and the consequent decrease in its production capacity; Increased volumes exported to Africa, especially to Argelia and Egypt, one of the countries where the Company maintains a subsidiary to market and distribute its products; Opening of new markets in Latin America and growth of exports to other Latin American countries; An increase in exports to Asia (i.e.: Hong Kong); Expectations with regards to the international beef industry remain optimistic primarily due to (i) the growth in demand in industrialized and developing countries, (ii) a gradual reduction of sanitary and economic barriers imposed by some of the leading consuming and importing countries, (iii) a reduction of cattle herd in Russia and the consequent decrease in its production capacity, (iv) a reduction of subsidies to cattle ranchers and exporters in the European Union, which has been negatively affecting its production and (v) beef imports expected in China as a result of the significant growth in its beef consumption. Average export sales prices have decreased by 4.3% for the quarter, mainly driven by the product mix sold during the quarter, as the Company began to export higher volumes to Eastern European and Middle Eastern countries. In terms of product mix sold by the Company in international markets, fresh beef sales increased to 70% of total export revenues from 64% in the 1Q06, mainly driven by the increase in volumes sold during the period.

Export Export Net Net Revenues Revenues Distribution Distribution 1Q06 1Q06

Export Export Net Net Revenues Revenues Distribution Distribution 1Q07 1Q07

Processed Beef 36%

Processed Beef 30%

Fresh Beef 64%

Fresh Beef 70%

Net Revenues: R$501 millions Net Revenues: R$626 millions

Source: JBS

Source: JBS

For the quarter, Europe has remained JBS main export destination, mainly driven by increased export volumes as a result of the factors described above.

34

Exports Exports Destinations Destinations 1Q06 1Q06

Exports Destinations 1Q07 Exports Destinations 1Q07

USA 15%
Others 30%

Russia 15%

Others 36%

United Kingdom 12%

United Kingdom 10%

Russia 8% Spain 2% Hong Kong 4% Italy 6% Germany 5% Egypt 6% Holland 6%

Spain 4%

USA 10%

Germany 5% Egypt 5%

Holland 8% Hong Kong 5% Italy 8%

Source: JBS

Source: JBS

Income Statement Analysis

R$ million Net Sales Revenue Cost of Goods Sold Gross Margin Selling Expenses General and Administrative Expenses Net Financial Income (Expenses) Initial Public Offering Expenses Operating Income Non Operating Income (Exepnses) Income Tax and Social Contribution Minority Interest Net Income 1Q07 V% 1Q06 V%

1.086,1 100,0% -828,5 -76,3% 257,6 -99,9 -20,6 -57,0 -50,6 29,6 0,1 -19,6 0,5 10,6 23,7% -9,2% -1,9% -5,2% -4,7% 2,7% 0,0% -1,8% 0,0% 1,0%

886,1 100,0% -681,7 -76,9% 204,4 -77,6 -23,2 -42,2 0,0 61,5 0,1 -29,4 0,0 32,3 23,1% -8,8% -2,6% -4,8% 0,0% 6,9% 0,0% -3,3% 0,0% 3,6%

Net sales revenue increased by 22.6%, from R$886.1 million in the 1Q06 to R$1.1 billion in the 1Q07, primarily due to a growth of 19.9% in the total sales volume and to an increase in the average sales price of 2.2% compared to the same period of last year. The increase in volume is a result of higher

35

exports for the quarter, which grew by 35.9%, and to a growth of 12.7% in domestic sales in comparison to the same period of last year. Cost of goods sold increased by 21.5% to R$828.5 million in the 1Q07 from R$681.7 million in the 1Q06, primarily due to an increase in the volume of cattle slaughtered to meet the growing demand for the Companys products and to increased volumes sold during the quarter. As net sales revenue increased at a faster rate than cost of goods sold, the Companys gross profit increased by 26.0% to R$257.6 million in the 1Q07 from R$204.4 million in the 1Q06. Gross margin increased to 23.7% in 1Q07 from 23.1% in the same quarter of last year. General and administrative expenses fell to 1.9% as a percentage of net sales from 2.6% in the 1Q06 due to the growth in revenues posted for the quarter. Selling expenses increased to R$99.9 million from R$77.6 million in the 1Q06 mainly due to the increase in total sales volumes during the period. The Company also posted non-recurrent expenses totaling R$50.6 million, which are related to its initial public offering. As a result of the factors described above, JBS net income decreased by 67.0% to R$10.6 million in the 1Q07 from R$32.3 million in the 1Q06. EBITDA increased by 28.4% to R$156.2 million, compared to R$121.7 million in the 1Q06, while EBITDA margin grew to 14.4% compared to 13.7% in the same quarter of last year.

EBITDA EBITDA and and EBITDA EBITDA margin margin

Combined Pro Forma Consolidated Margin (%)

565 14.4%

: GR CA

,6% 50
11.8%

14.2% 13.7%

9.6% 9.1% 9.3% 6.0% 178 153 287 345

5.7% 4.9%

% 28
122

156

73 32 51

1999

2000

2001

2002

2003

2004

2005

2006

1Q06

1Q07

Source: JBS

36

INVESTMENTS
The Companys aggregate capital expenditures in property, plant and equipment, including acquisitions, were R$213.3 million and R$15.2 million for the 1Q07 and 1Q06, respectively. During the quarter, JBS invested primarily in the following projects: Increase of the production capacity of its processed beef plant located in Andradina, So Paulo from 30 tons to 100 tons per day; Increase of the production capacity of its plant located in Barra do Gara, Mato Grosso from 1,300 head of cattle slaughtered and deboned per day to 2,500 head of cattle slaughtered and deboned per day; Increase of the production capacity of its plant located in Campo Grande, Mato Grosso do Sul from 1,300 head of cattle slaughtered and deboned per day to 3,000 head of cattle slaughtered and deboned per day; Increase of the production capacity of its plant located in Vilhena, Rondnia, from 900 head of cattle slaughtered and deboned per day to 2,200 head of cattle slaughtered and deboned per day; Construction of a beef jerky production plant in Santo Antnio da Posse, So Paulo, which is currently in its final phase; Increase of the production capacity of its plant located in Barretos, So Paulo from 1,600 head of cattle slaughtered and deboned per day to 2,500 head of cattle slaughtered and deboned per day; Acquisition of new trucks to be used for product transportation; and Other investments such as acquisition of new equipment and maintenance of the Companys facilities;

DEBT LEVEL
R$ million Short-term Loans Long-term Loans Total Debt Cash and Marketable Securities Net Debt Net Debt/EBITDA 1Q07 1.073,4 1.869,0 2.942,4 1.468,9 1.473,5 2,5x 2006 653,6 2.040,0 2.693,6 261,1 2.432,5 4,3x Var. % 64,2% -8,4% 9,2% 462,6% -39,4%

37

JBS issued 9.375% notes (Reg. S) due 2011 in an aggregate principal amount of US$200.0 million on February 6, 2006 and US$75.0 million on February 14, 2006. Interest on these notes accrues at a rate of 9.375% per annum and is payable quarterly. The principal amount of these notes is payable in full on February 7, 2011. On August 4, 2006, the Company issued 10.50% notes (144A/Reg. S) due 2016 in an aggregate principal amount of US$300.0 million. Interest on these notes accrues at a rate of 10.50% per annum and is payable semiannually. The principal amount of these notes is payable in full on August 4, 2016. The increase in cash and marketable securities refers to the proceeds from the Companys primary offering of 150,000,000 million of its common shares, which began on March 28, 2007, as described on this page of this report.

RECENT EVENTS
In accordance to its expansion strategy, and taking advantage of opportunities for consolidation within the sector, as well as the opening and growth of international markets, in January of 2007, JBS, through Swift-Armour Argentina S.A., acquired a plant in Berazategui, Buenos Aires, with a slaughtering capacity of approximately 1,000 heads per day. Also in January of 2007, the Company acquired 100% of the shares of the North American company SB Holdings and its subsidiaries, Tupman Thurlow, Astro Sales International and Austral Foods for US$11.9 million. SB Holdings is one of the largest industrialized beef distributors in the North American market and is the proprietor of the Hereford, Manco Pride and Rip n Ready brands. This recent acquisition provided JBS with direct access to the processed beef market in the United States. For the year 2006, SB Holdings consolidated net sales revenue totaled US$55.7 million. On March 19, 2007, the Company entered into a joint venture agreement with Mr. Jay Earl Link, an American entrepreneur in the beef jerky business, pursuant to which each of Mr. Link and JBS will own 50% of a new company that will produce and market beef jerky in Brazil and in the United States. JBS will contribute its beef jerky facility in the City of Santo Antnio da Posse, So Paulo, to the joint venture. This facility is currently being built and it estimated to be valued at approximately US$10.0 million when completed. Mr. Link will contribute US$4.0 million in cash and two beef jerky facilities located in the United States (with an estimated aggregate value of US$6.0 million) to the joint venture. It is expected that the joint venture will enter into credit facilities in the approximate amount of US$30.0 million in order to finance its working capital requirements.

INITIAL PUBLIC OFFERING

On March 28, 2007, in accordance to the terms of CVM Instruction 358, of January 3, 2002, and article 53 of CVM Instruction 400, of December 29, 2003, JBS S.A. initiated a public offering for a primary and secondary distribution of 200,000,000 of it common shares, representing 23.5% of its capital, being 150,000,000 million shares related to the primary offer and 50,000,000 shares related to the secondary offer, all of them listed at the So Paulo Stock Exchange (Bovespa) in the Novo Mercado

38

segment, under the symbol JBSS3, at the price of R$8.00 per share, with proceeds totaling R$1.6 billion. The Company has received a total of R$1.2 billion as proceeds from the primary offer, before the deduction of commissions and related expenses. JBS will use the majority of the net proceeds from this offering to: (i) additional investments in, and purchase of equipment for, its plants in order to increase their operating capacity; (ii) the acquisition of companies or assets that have not yet been identified in the beef industry; and (iii) strengthening working capital. Decisions as to the use of proceeds for operating capacity expansion or for acquisitions will only be made after economical and legal evaluations are made on the investment opportunities in order to identify how they will add value to the Companys shareholders. Although JBS strategy contemplates acquisitions as a way to accelerate its future growth, while the Brazilian and Argentine markets are very fragmented and offer several acquisition opportunities, it is not possible to forecast when an acquisition may occur or the amounts involved in future transactions. Any acquisition that may be made by the Company will be communicated to the market in accordance to the applicable legislation. The table below summarizes the estimated and approximate percentages and the intended use of the net proceeds from the primary offer:

Use of Proceeds Investments in, and purchase of equipment for, JBS plants and acquisition of companies or assets Working Capital

% 70% 30%

39

CONTACTS

Corporate Headquarters Avenida Marginal Direita do Tiet, 500 Cep: 05111-100 So Paulo SP Brasil Phone: (+55 11) 3144-4000 Fax: (+55 11) 3144-4279 www.jbs.com.br Srgio Longo Director of Finance and Investor Relations Phone:(5511) 3144-4224 E-mail: sergiolongo@jbs.com.br Andr Gustavo Menezes Investor Relations Manager Phone:(5511) 3144-4055 E-mail: ir@jbs.com.br

This release contains forward-looking statements relating to the prospects of the business, estimates for operating and financial results, and those related to growth prospects of JBS. These are merely projections and, as such, are based exclusively on the expectations of JBS management concerning the future of the business and its continued access to capital to fund the Companys business plan. Such forward-looking statements depend, substantially, on changes in market conditions, government regulations, competitive pressures, the performance of the Brazilian economy and the industry, among other factors and risks disclosed in JBS filed disclosure documents and are, therefore, subject to change without prior notice..

40

FINANCIAL STATEMENTS
JBS S.A. and its Subsidiaries BALANCE SHEETS (In thousands of Reais)
Company
31.03.07 ASSETS CURRENT ASSETS Cash and cash equivalents Marketable securities Trade accounts receivable from customers Inventories Taxes recoverable Prepaid expenses Other current assets 1,187,581 206,113 708,215 631,764 437,405 7,639 46,063 54,375 145,346 665,782 563,935 424,941 1,936 43,494 1,221,931 246,941 747,879 785,016 546,361 10,336 68,184 68,629 192,442 692,819 657,504 567,264 2,956 68,938 31.12.06

Consolidated
31.03.07 31.12.06

TOTAL CURRENT ASSETS

3,224,780

1,899,809

3,626,648

2,250,552

LONG-TERM ASSETS Long-term assets Account receivable from related parties Judicial deposits and others Deferred income tax and social contribution Taxes recoverable Total Long-term assets Permanent assets Advances for investments in subsidiaries Investments in subsidiaries Other investments Property, plant and equipment Intangible assets Deferred charges

34,067 5,665 16,853 24,129 80,714

67,523 4,742 16,050 24,129 112,444

8,915 25,572 33,670 68,157

5,626 23,492 34,752 63,870

Total Permanent assets

TOTAL LONG-TERM ASSETS TOTAL ASSETS

516,460 10 1,034,002 9,615 1,560,087 1,640,801 4,865,581

35,051 367,822 10 899,176 9,615 1,311,674 1,424,118 3,323,927

20,988 10 1,311,542 23,806 1,356,346 1,424,503 5,051,151

10 1,125,218 24,340 847 1,150,415 1,214,285 3,464,837

41

JBS S.A. and its Subsidiaries BALANCE SHEETS (In thousands of Reais)
Company
31.03.07 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Trade accounts payable to suppliers Loans and financings Payroll and taxes payable Other current liabilities 354,981 981,276 90,466 39,385 271,460 579,128 73,142 41,545 415,806 1,073,432 114,045 42,405 309,294 653,638 84,447 51,886 31.12.06

Consolidated
31.03.07 31.12.06

TOTAL CURRENT LIABILITIES

1,466,108

965,275

1,645,688

1,099,265

LONG-TERM Loans and financings Deferred income tax and social contribution Accrual for contingencies Other Long-term liabilities 1,868,978 61,984 49,568 25,255 2,039,977 62,665 47,207 25,758 1,868,978 61,984 50,056 32,037 2,039,977 62,665 53,005 26,471

TOTAL LONG-TERM LIABILITIES

2,005,785

2,175,607

2,013,055

2,182,118

Minority interest

(1,280)

409

SHAREHOLDERS' EQUITY Capital stock Capital reserve Revaluation reserve Retained earnings TOTAL SHAREHOLDERS' EQUITY TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 91,748 1,160,776 129,199 11,965 1,393,688 52,524 130,521 183,045 91,748 1,160,776 129,199 11,965 1,393,688 52,524 130,521 183,045

4,865,581

3,323,927

5,051,151

3,464,837

42

JBS S.A. and its Subsidiaries

STATEMENTS OF INCOME FOR THE PERIOD OF THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (In thousands of Reais)

Company
2007 GROSS SALES REVENUE Sales of products: Income from sales of products - domestic market Income from sales of products - exports SALES DEDUCTIONS Returns and discounts Sales taxes (37,973) (62,196) (100,169) 917,690 (670,046) 247,644 (14,853) (89,073) (39,857) (21,711) (50,564) (216,058) 31,586 68 31,654 (21,814) 803 (21,011) 10,643 (16,189) (46,644) (62,833) 757,656 (562,241) 195,415 (16,062) (69,764) (20,456) (26,448) (132,730) 62,685 (181) 62,504 (30,243) (30,243) 32,261 2006*

Consolidated
2007 2006*

494,980 522,879 1,017,859

407,082 413,407 820,489

550,766 651,607 1,202,373

449,791 509,559 959,350

(46,267) (69,968) (116,235) 1,086,138 (828,495) 257,643 (20,567) (99,894) (56,983) (50,564) (228,008) 29,635 60 29,695 (22,074) 2,489 (19,585) 10,110 533

(26,595) (46,644) (73,239) 886,111 (681,667) 204,444 (23,157) (77,586) (42,190) (142,933) 61,511 129 61,640 (29,395) (29,395) 32,245 16 32,261

NET SALE REVENUE Cost of goods sold GROSS INCOME OPERATING INCOME (EXPENSE), NET General and administrative expenses Selling expenses Financial income (expense), net Equity Initial Public Offering expenses

OPERATING INCOME NON-OPERATING INCOME (EXPENSE), NET INCOME BEFORE INCOME TAX AND SOCIAL CONTRIBUTION Income tax and social contribution Deferred income tax and social contribution

INCOME BEFORE MINORITY Minority interest NET INCOME Net income per thousands of Group share Statement of EBITDA (Earning before income tax and social contribution, interest, depreciation and amortization and non-operating income (expense), net

10,643 12.52

32,261 62.57

10,643

Income before income tax and social contribution Financial income (expense), net Depreciation and amortization Non-operating income (expense), net Equity Initial Public Offering expenses AMOUNT OF EBITDA

31,654 39,857 13,873 (68) 21,711 50,564 157,591

62,504 20,456 12,813 181 26,448 122,402

29,695 56,983 19,047 (60) 50,564 156,229

61,640 42,190 17,987 (129) 121,688

43