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Glossary

A

Adjustment to Present Value (AVP)
On December 28, 2007, Federal Law 11,638 was enacted, which amended, revoked and introduced new provisions to Brazilian Corporate Law, most notably Chapter XV concerning accounting matters, with the law coming into force on January 1, 2008. The main purpose of the new law was to update Brazilian Corporate Law to enable the convergence of generally accepted accounting practices in Brazil with International Financial Reporting Standards (IFRS), as well as to allow new rules and procedures to be issued by the Securities and Exchange Commission of Brazil (CVM), in accordance with international accounting standards.
Complementing this process, the CVM, through Instruction 469 dated May 2, 2008, instructed publicly traded companies on the disclosure and accounting treatment of certain changes introduced by Federal Law 11,638/07.
The main changes introduced by Federal Law 11,638/07 that impact the Company's standalone and consolidated Quarterly Financial Information include the mandatory valuation of significant long-term assets and liabilities, such as "Concession Rights" and "Concession Fee Obligations", at present value (Adjustment to Present Value). Previously the Company accounted "Concession Rights" and "Concession Fee Obligations" at their nominal value.
The effects from the adjustments to present value from "Concession Rights" and "Concession Fee Obligations" that occurred up to December 31, 2007 were accounted directly under Equity in 2008. As from January 1, 2008, the effects from adjustments to present value have been accounted directly in the quarterly results.

B

C

Concession Authority
The federal, state or local government or federal district that is responsible for the public service, prior to the execution of works or otherwise, that is the subject matter of concession or permission. (Federal Law 8,987 of 1995 - Article 2 -CF. Article 1). The concessionaire has access to operate the infrastructure to provide the public services on behalf of the concession authority pursuant to the contractual conditions. The concession authority relies on the regulatory agencies (ARTESP in the state of São Paulo and ANTT for the federal government) to monitor and inspect the transportation services delegated and to regulate the highway concession program.

Construction Revenue and Costs
These are non-cash accounting entries under the new rules implemented by IFRS that seek to translate the amount of investment the Company makes in intangible assets. The amount recorded as construction revenue is exactly the same as the amount recorded as construction cost, i.e. it does not affect the Company's results.

Costs with the Concession Authority
These are payments that have been stipulated in the concession contracts. These costs are composed of: expenses with the "Variable Fee" for state concessions, which corresponds to 3% of gross revenue at the concessions Autovias, Centrovias and Vianorte, plus 3% of toll revenue and 25% of ancillary revenue; and by costs with "Inspection Funds" and "Technological Development" at the federal concessions, which are adjusted annually by the IPCA inflation index.

D

E

EBITDA and EBITDA Margin
EBITDA is Earnings before Interest, Taxes, Depreciation and Amortization.   EBITDA is not a measure adopted in accounting standards and does not represent cash flow for the periods presented and therefore should not be considered an alternative to cash flow as an indicator of liquidity. EBITDA does not have a standardized meaning and therefore cannot be compared to the EBITDA of other companies.
EBITDA Margin is the ratio between net operating revenue excluding construction revenue and EBITDA.

Adjusted EBITDA and Adjusted EBITDA Margin
EBITDA adjusted by the reversal of the provisions for road maintenance. The Company believes adjusted EBITDA is the best way to show its operating cash flow. Adjusted EBITDA Margin is the ratio between net operating revenue excluding construction revenue and Adjusted EBITDA.

Electronic Toll Collection / AVI System
The AVI system is an electronic payment system used on our highways. Drivers who use the AVI system have an electronic sensor mounted on their windshield that enables the system to recognize the category of vehicle that they are driving. As they pass through the toll plaza lane, antennae capture the signals emitted and the sensors record the vehicle's presence and calculate the total amount owed, without the driver having to stop the vehicle.

F

Federal Concessionaires 
Specific Purpose Companies created by the winners of the bidding process with which the Concession Contracts were signed which have the specific corporate purpose of maintaining, conserving and operating federal highways. Federal Concessionaires are regulated by the National Road Transportation Agency (ANTT). Arteris currently operates five federal concessionaires in Brazil: (Autopista Planalto Sul, Autopista Fluminense, Autopista Fernão Dias, Autopista Régis Bittencourt and Autopista Litoral Su).

Fixed Concession Fee
In accordance with the concession contracts, the state concessionaires must pay the concession authority a fixed fee in exchange for granting the concession. The contracts also establish that the amount for the fixed fee must be settled in monthly payments over the duration of the concession period. We have opted to account the value of the grant of concession under assets and the total amount payable to the concession authority for the fixed concession fee under liabilities.

G

H

I

J

K

L

Leverage Ratio
The leverage ratio is defined as Net Debt (Gross Debt less Cash and Cash Equivalents) divided by Adjusted EBITDA (adjusted by the reversal of the provision for maintenance), less the Fixed Concession Fee in cash flow. The lower the leverage ratio, the greater the amount of funding that can be raised in credit markets.

M

Monetary Restatement of the Fixed Concession Fee
The concession contracts between the state concessionaires and the concession authority establish that the monthly payments of the fixed concession fee be adjusted by the IGP-M index every July 1st, which is the same date on which the tolls are adjusted by the same index.

N

O

P

Provision for Maintenance
Estimated spending required to settle the current obligations to maintain infrastructure at the operating levels stipulated in the contract, considering the wear caused by use. The Concessionaire must constitute a provision based on its best estimate of the spending required to maintain a certain level of service or to recuperate infrastructure to operating conditions prior to returning the assets to the concession authority at the end of the concession period, as stipulated in the contract.

Q

R

S

State Concessionaires
Specific Purpose Companies created by the winners of the bidding process with which the Concession Contracts were signed which have the specific corporate purpose of maintaining, conserving and operating state highways. State Concessionaires are regulated by the São Paulo State Public Transportation Services Regulatory Agency (ARTESP). Arteris currently manages four state concessionaires in the state of São Paulo (Autovias, Centrovias, Intervias and Vianorte).

T

Toll Adjustments
As established in the concession contracts in the state of São Paulo, tolls are readjusted every July based on the variation in inflation measured by the IGP-M index in the 12-month period ending on May 31. On July 1, 2013, the IGP-M index will be replaced by the IPCA index as the basis for adjustment. The economic and financial imbalances resulting from the change in index will be evaluated once every two years and be rebalanced in relation to the contract duration transpired. Toll adjustments at the federal concessions are based on the variation in inflation measured by the IPCA index published by the Brazilian Geography and Statistics Institute (IBGE) in the period from the month preceding the base date in the toll proposal presentation, i.e., June 2007, to the month preceding the date on which tolls began to be collected. After this first adjustment, all subsequent adjustments take place annually and are also based on the cumulative variation in the IPCA index in the 12 months since the previous adjustment.

U

V

Vehicle Equivalents
Vehicle equivalent unit (VEU) is used as the basis for charging tolls. A passenger vehicle is considered a vehicle equivalent and a commercial vehicle (such as a truck or bus) is calculated by the number of axles, with each axle counting as one passenger vehicle. One passenger vehicle is equivalent to one axle on a commercial vehicle.

W

X

Y

Z

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