Positivo Informtica recorded sales volume of 553,000 PCs units in 4Q10, 14.2% up year-on-year.
Despite the fiercer competition, notebook sales climbed by 36.6% in the same period, contributing to annual sales of 1,980,000 units, a new record and 11.3% up on 2009.
Hardware Sales Volume (units) Pcs Desktops Notebooks - Netbooks Segment Retail Government Corporate % Chg. % Chg. 4Q10 x 4Q09 4Q10 x 3Q10 14.2 -3.2 36.6 -21.4 14.2 5.3 90.1 73.5 6.0 -13.1 32.6 -36.9 6.0 25.5 -50.5 70.8 % Chg. 2010 x 2009 11.3 8.5 15.6 -17.5 11.3 1.1 79.8 -16.6
4Q09 484,388 272,862 211,526 20,086 484,388 430,558 37,511 16,319
3Q10 521,798 304,004 217,794 25,036 521,798 361,206 144,023 16,569
4Q10 553,023 264,142 288,881 15,786 553,023 453,416 71,300 28,307
2009 1,778,462 1,064,290 714,172 80,028 1,778,462 1,432,189 251,561 94,712
2010 1,979,807 1,154,328 825,479 66,017 1,979,807 1,448,423 452,370 79,014
4.2) AVERAGE PRICES The 8.7% quarter-over-quarter reduction in average PC prices in 4Q10 was influenced by the decline in desktop sales to the government segment and the larger share of entry-level notebook sales in the product mix. The Company altered its prices during the quarter due to the increased competition, jeopardizing its profitability, as anticipated in the January 28 press release containing the preliminary sales volume and revenue figures.
Avarage Positivo Computer Price Dollar Average for the Period (1) Pcs In R$ In U$ Desktops In R$ In U$ Notebooks In R$ In U$ Conventional notebooks In R$ In U$
% Chg. % Chg. 4Q10 x 4Q09 4Q10 x 3Q10 -2.4 -2.8

% Chg. 2010 x 2009 -9.4

1.7400

1.7472

1.6977

1.9414

1.7581
1,347.1 774.2 1,209.7 695.2 1,521.2 874.2
1,298.4 743.1 1,312.0 751.1 1,278.9 731.7
1,185.5 698.3 1,208.5 711.7 1,164.5 686.1
-12.0 -9.8 -0.1 2.4 -23.4 -21.5
-8.7 -6.0 -7.9 -5.3 -8.9 -6.2
1,362.4 701.7 1,245.3 637.1 1,532.3 795.6
1,302.8 741.0 1,308.9 742.5 1,294.2 738.9
-4.4 5.6 5.1 16.6 -15.5 -7.1

1,575.9 905.7

1,319.0 754.6

1,175.9 692.8

-25.4 -23.5

-10.9 -8.2

1,586.9 826.6

1,318.5 752.9

-16.9 -8.9
Calculated by the Company, weighted by monthly sales to reduce seasonal distortions, based on the sell PTAX of the Central Bank of Brazil.

4.3) GROSS REVENUE

Gross revenue totaled R$678.9 million in 4Q10, 3.3% down on 4Q09. In 2010 as a whole, gross revenue
reached the record level of R$2,673 million, 6.4% higher than in the previous year, fueled by the increase in sales volume.

Gross Revenue (R$ million) Total Gross Revenue Hardware - Product Desktops Notebooks - Netbooks Others Hardware - Segment Retail Government Corporate Educational Technology
% Chg. % Chg. 4Q10 x 4Q09 4Q10 x 3Q10 -3.3 -2.6 -10.7 5.3 -24.6 51.1 -2.6 -10.6 34.4 31.0 -31.5 -3.3 -3.4 -20.0 21.8 -36.2 -29.7 -3.4 20.1 -49.8 49.4 2.7
% Chg. 2010 x 2009 6.4 6.9 12.7 -2.2 -26.5 119.8 6.9 -8.6 88.6 -20.7 -15.8
701.8 686.1 357.6 321.8 20.1 6.6 686.1 561.3 91.4 33.4 15.7
701.9 691.4 398.9 278.3 23.7 14.2 691.4 417.8 244.3 29.3 10.5
678.9 668.2 319.2 338.9 15.1 10.0 668.2 501.6 122.8 43.8 10.8
2,513.1 2,453.4 1,340.3 1,094.4 89.6 18.7 2,453.4 1,885.2 410.5 157.7 59.7
2,672.9 2,622.6 1,510.9 1,070.6 65.9 41.1 2,622.6 1,723.3 774.3 125.0 50.3
4.4) DEDUCTIONS FROM GROSS REVENUE Deductions from gross revenue, comprising taxes and returns, totaled R$160.4 million in 4Q10, or 23.6% of gross revenue, 0.5 p.p. and 1.8 p.p. up on 4Q09 and 3Q10, respectively, due to the lower share of direct sales to government clients, which are exempt from PIS and COFINS taxes. As a percentage of gross revenue, deductions came to 23.1% in 2010, 0.3 p.p. less than in 2009.
4.5) NET REVENUE Net revenue totaled R$590.1 million in 4Q10, 3.9% down year-on-year, and R$2,334 million in 2010 as a whole, 7.1% higher than in 2009.
Net Revenue (R$ milhes) Total Net Revenue Hardware - Product Desktops Notebooks - Netbooks Others Hardware - Segment Retail Government Corporate Educational Technology % Chg. % Chg. 4Q10 x 4Q09 4Q10 x 3Q10 -3.9 -2.9 -13.7 9.5 -5.5 47.2 -2.9 -14.8 62.5 54.6 -44.8 -5.0 -4.8 -20.8 20.2 -41.8 -28.1 -4.8 21.2 -50.3 41.4 -15.9 % Chg. 2010 x 2009 7.1 7.6 12.7 -1.0 -23.7 128.0 7.6 -9.9 98.7 -16.6 -14.9
614.2 599.2 329.2 264.0 12.1 5.9 599.2 504.2 70.4 24.5 15.0
621.2 611.3 358.7 240.4 19.7 12.2 611.3 354.3 230.2 26.8 9.8
590.1 581.8 284.1 289.0 11.5 8.8 581.8 429.5 114.4 37.9 8.3
2,180.0 2,126.9 1,191.3 920.3 69.2 15.3 2,126.9 1,645.5 351.8 129.6 53.1
2,334.0 2,288.9 1,343.1 910.9 52.8 34.9 2,288.9 1,481.9 698.9 108.1 45.1

5) FINANCIAL PERFORMANCE

5.1) COST (Comit Gestor da Internet) Fonte: CGI OF GOODS SOLD (COGS) AND GROSS PROFIT*
Cost of Goods Sold (R$ million) Raw Materials and Components Labor Outsourced Services Depreciation and Amortization Sundry Total
4Q09 (379.1) (21.2) (3.3) (4.8) (8.9) (417.2)
3Q10 (406.8) (25.9) (4.9) (1.9) (8.8) (448.3)
4Q10 (433.8) (28.9) (3.8) (1.5) (10.1) (478.2)
% Chg. % Chg. 4Q10 x 4Q09 4Q10 x 3Q10 14.4 36.4 15.1 -67.7 13.9 14.6 6.7 11.6 -22.6 -20.5 14.8 6.7
2009 (1,435.8) (74.0) (14.3) (15.6) (28.2) (1,567.9)
2010 (1,522.5) (107.4) (19.6) (9.7) (32.9) (1,692.1)
% Chg. 2010 x 2009 6.0 45.0 36.6 -37.9 17.0 7.9

Cost of Goods Sold (% of Net Revenue) Raw Materials and Components Labor Outsourced Services Depreciation and Amortization Sundry Total
4Q09 61.7 3.5 0.5 0.8 1.4 67.9
3Q10 65.5 4.2 0.8 0.3 1.4 72.2
4Q10 73.5 4.9 0.6 0.3 1.7 81.0
% Chg. % Chg. 4Q10 x 4Q09 4Q10 x 3Q10 +11.8 p.p. +1.4 p.p. +0.1 p.p. -0.5 p.p. +0.3 p.p. +13.1 p.p. +8.0 p.p. +0.7 p.p. -0.1 p.p. -0.1 p.p. +0.3 p.p. +8.9 p.p.
2009 65.9 3.4 0.7 0.7 1.3 71.9
2010 65.2 4.6 0.8 0.4 1.4 72.5
% Chg. 2010 x 2009 -0.6 p.p. +1.2 p.p. +0.2 p.p. -0.3 p.p. +0.1 p.p. +0.6 p.p.
* Costs with raw materials and components and general costs were reclassified in 2010.
As a percentage of net revenue, COGS came to 81.0% in 4Q10, 13.1 p.p. and 8.9 p.p. up, respectively, on 4Q09 and 3Q10, primarily due to lower price levels in 4Q10 and certain extraordinary costs, as explained below.
Raw materials and components Fourth-quarter raw material and components accounted for 73.5% of net revenue, an increase of 11.8 p.p. and 8.0 p.p., respectively, over 4Q09 and 3Q10, chiefly due to lower prices in the period as a result of heightened competition and the characteristics of the 4Q10 product mix, as mentioned previously. Component costs remained stable in the period. In 2010, raw materials and components represented 65.2% of net revenue, a 0.6 p.p. improvement on 2009.
Labor Labor costs totaled R$28.9 million in 4Q10, equivalent to 4.9% of net revenue, 1.4 p.p. and 0.7 p.p. higher than in 4Q09 and 3Q10 respectively. The lower dilution of these costs as a result of the revenue decline, pulled down by the reduction in average prices, and the recognition of rescission costs related to the ongoing adjustments to the workforce at the end of the period contributed to said increases in costs. The latter reflected the Companys ongoing initiatives to maximize efficiency, including the future hiring of a larger proportion of temporary staff in typical periods of high industrial output, respecting the seasonality of the retail market, the Companys biggest in terms of sales volume. It is worth noting that, despite the initial cost of these measures, the Company expects to capture gains in this line throughout 2011, particularly in periods of high revenue.
Gross Profit Gross profit totaled R$111.9 million in 4Q10, accompanied by a gross margin of 19.0%, 13.1 p.p. and 8.9 p.p. lower than in 4Q09 and 3Q10, respectively, due to the reasons explained in this section. In 2010, gross profit amounted to R$641.9 million, 4.9% higher year-on-year, corresponding to 27.5% of net revenue, 0.6 p.p. down on 2009.

5.2) OPERATING EXPENSES

Operating Expenses (R$ milhes) Selling Expenses General and Administrative Expenses Financial Result Other Revenue (Expenses) Total
4Q09 (111.6) (26.8) (20.6) 0.3 (158.7)
3Q10 (129.5) (26.3) (2.2) 0.3 (157.7)
4Q10 (90.8) (27.8) (8.5) 2.3 (124.8)
% Chg. % Chg. 4Q10 x 4Q09 4Q10 x 3Q10 -18.6 3.5 -58.6 700.4 -21.3 -29.9 5.5 286.7 764.1 -20.9

2009 (381.8) (79.0) (93.7) 4.6 (549.9)
2010 (412.3) (109.3) (25.4) 1.7 (545.3)
% Chg. 2010 x 2009 8.0 38.4 -72.8 -62.1 -0.8
Operating Expenses (% of Net Revenue) Selling Expenses General and Administrative Expenses Financial Result Other Revenue (Expenses) Total
4Q09 18.2 4.4 3.4 (0.0) 25.8
3Q10 20.8 4.2 0.4 (0.0) 25.4
4Q10 15.4 4.7 1.4 (0.4) 21.2
% Chg. % Chg. 4Q10 x 4Q09 4Q10 x 3Q10 -2.8 p.p. +0.3 p.p. -1.9 p.p. -0.3 p.p. -4.7 p.p. -5.5 p.p. +0.5 p.p. +1.1 p.p. -0.3 p.p. -4.2 p.p.
2009 17.5 3.6 4.3 (0.2) 25.2
2010 17.7 4.7 1.1 (0.1) 23.4
% Chg. 2010 x 2009 +0.2 p.p. +1.1 p.p. -3.2 p.p. +0.1 p.p. -1.9 p.p.
The largest component of operating expenses is selling expenses, which accounted for 72.8% of this item in 4Q10.
Operating Expenses Breakdown - 4Q10

Selling 72.8%

G&A 22.2%
Financial 6.8% Others -1.8%
Selling Expenses Selling expenses totaled R$90.8 million in 4Q10, equivalent to 15.4% of net revenue, 2.8 p.p. and 5.5 p.p. lower than in 4Q09 and 3Q10 respectively, primarily due to rationalization of expenses related to marketing, as explained below. In 2010, selling expenses came to R$412.3 million, corresponding to 17.7% of net revenue, 0.2 p.p. up on 2009.
Selling Expenses (R$ million) Marketing Technical Assistance and Warranties Commissions Freight Depreciation and Amortization Others Total % of Net Revenue % Chg. % Chg. 4Q10 x 4Q09 4Q10 x 3Q10 -30.3 6.7 -22.3 -60.3 99.4 -6.5 -18.6 -2.8 p.p. -27.0 -37.3 -4.2 -67.9 68.5 -19.9 -29.9 -5.5 p.p. % Chg. 2010 x 2009 -10.7 52.1 -3.3 -27.0 294.1 23.9 8.0 +0.2 p.p.
4Q09 (47.1) (29.3) (19.2) (6.4) (0.3) (9.2) (111.6) 18.2
3Q10 (45.0) (49.8) (15.5) (8.0) (0.4) (10.8) (129.5) 20.8
4Q10 (32.8) (31.2) (14.9) (2.6) (0.7) (8.6) (90.8) 15.4
2009 (175.3) (96.5) (54.9) (26.8) (0.5) (27.8) (381.8) 17.5
2010 (156.6) (146.7) (53.1) (19.6) (1.8) (34.4) (412.3) 17.7
Selling Expenses (% of Net Revenue) Marketing Technical Assistance and Warranties Commissions Freight Depreciation and Amortization Others Total
4Q09 7.7 4.8 3.1 1.0 0.1 1.5 18.2
3Q10 7.2 8.0 2.5 1.3 0.1 1.7 20.8
4Q10 5.6 5.3 2.5 0.4 0.0 0.0 15.4
% Chg. % Chg. 4Q10 x 4Q09 4Q10 x 3Q10 -2.1 p.p. +0.5 p.p. -0.6 p.p. -0.6 p.p. -0.1 p.p. -1.5 p.p. -2.8 p.p. -1.7 p.p. -2.7 p.p. +0.0 p.p. -0.8 p.p. -0.1 p.p. -1.7 p.p. -5.5 p.p.
2009 8.0 4.4 2.5 1.2 0.0 0.0 17.5
2010 6.7 6.3 2.3 0.8 0.0 0.0 17.7
% Chg. 2010 x 2009 -1.3 p.p. +1.9 p.p. -0.2 p.p. -0.4 p.p. +0.0 p.p. +0.0 p.p. +0.2 p.p.
Selling Expenses (% of Net Revenue)

Marketing Expenses (% of Net Revenue)
20.8% -5.5 p.p. 18.2% 17.4%

16.8% 16.4%

-1.7 p.p.

20.2% 15.4% 14.7%

7.7% 7.2%

7.9% 7.8%

7.2% 6.2% 7.1% 6.1%

5.6% 5.3%

Technical Support and Warranties Expenses (% of Net Revenue)
Commissions Expenses (% of Net Revenue)

8.0% 6.2%

-2.7 p.p. +0.0 p.p.

3.1% 2.1%

- - - Excluding R&D effect
Freight Expenses (% of Net Revenue)
Other Expenses (% of Net Revenue)

-0.3 p.p. -0.8 p.p.

1.0% 0.6% 1.0%

1.1% 1.2%

4Q09 1Q10 2Q10 3Q10 4Q10

0.5% 1Q10 2Q10 3Q10 4Q10

Marketing The Company invested R$32.8 million in marketing in 4Q10, 30.3% and 27.0% down on 4Q09 and 3Q10, respectively. These expenses accounted for 5.6% of net revenue, 2.1 p.p. down year-on-year and 1.7 p.p. less than the previous quarter, influenced by the reduction in retail prices, offset by lower shared marketing expenses. R&D expenses have been recognized under this line since 4Q09. Excluding this effect, marketing expenses would have represented 5.3% of net revenue in 4Q10, 1.9 p.p. and 1.8 p.p. down on 4Q09 and 3Q10 respectively. Once again underlining its deep understanding of Brazilian consumers and market conditions, the Company launched the Positivo Unique 60, Brazils first entry-level notebook priced under one thousand reais, with a high-definition LED widescreen and Windows 7 Starter installed. The product was designed to fill the gap between netbooks and conventional notebooks and was an immediate success, taking the retail market by surprise. It also launched a new version of the Positivo Alfa e-reader, this time equipped with Wi-Fi technology, permitting wireless book downloads. Positivo Alfa Wi-Fi, which comes with the Aurlio Dictionary already installed, weighs only 240 grams, has a 6 self-rotating touchscreen and can store up to 1,500 books.
Storage of up to 1,500 books
Just 240g and 8.9 mm thick
Other period launches included the new generation Positivo Premium line, featuring a more modern design and rubberized finishing, Positivo Mini Fit, equipped with Blu-Ray, and Positivo Union, with an 18.5 widescreen.

Positivo Premium

Positivo Mini Fit with Blu-Ray

Positivo Union 18.5

Technical Support and Warranties Technical support and warranty expenses corresponded to 5.3% of net revenue in 4Q10, 0.5 p.p. up yearon-year. In comparison with 3Q10, these expenses fell by 2.7 p.p., primarily caused by the reduction in sales to government clients due to the end of deliveries related to major projects in the 2010 portfolio. In 2010, these expenses accounted for 6.3% of net revenue, 1.9 p.p. more than in 2009, reflecting the higher share of deliveries to corporate and government clients in the total sales mix, which have differentiated configurations, services and time of service. In addition, the Company improved the accounting procedures for the scrapping of spare component inventories to better reflect the obsolescence of these items, increasing provisions for these expenses throughout the year. However, this situation should become normalized by the end of 2Q11. As part of the process for reducing expenses and increasing efficiency, the Company began implementing a series of measures which should have optimize these expenses as of 3Q11, including changing the configuration of incoming calls in the CRP (Positivo Relationship Center) and reassessing the technical support network.

% Chg. 2010 x 2009 4.9 40.3 -2.6 75.7 99.3 38.4 +1.1 p.p.
Excluding non-recurring effects and the recognition of R&D expenses, G&A expenses totaled R$23.8 million, 1.6% less than in 3Q10.
General and Administrative Expenses (R$ million)

26.3 24.2

27.8 23.8
- - - Excluding R&D and non-recurring effects
Financial Result The 4Q10 financial result was a net expense of R$8.5 million, a 58.6% improvement over the same period a year earlier, influenced by the higher recognition of financial revenue from the collection of receivables in the period, especially from government clients. The annual financial result was a net expense of R$25.4 million, an improvement of 72.8% over the R$93.7 million expense recorded in 2009, chiefly due to reduced losses from NDFs related to FX hedges for major government projects.
Financial Result (R$ million) Financial Revenue Financial Expenses Exchange Variation 1 Total
4Q09 3.6 (25.2) 1.0 (20.6)
3Q10 10.8 (14.4) 1.4 (2.2)
4Q10 8.0 (16.0) (0.6) (8.5)
% Chg. % Chg. 4Q10 x 4Q09 4Q10 x 3Q10 126.0 -36.5 -156.3 -58.6 -25.5 11.2 -141.9 286.7
2009 23.5 (73.6) (43.6) (93.7)
2010 29.3 (56.3) 1.6 (25.4)
% Chg. 2010 x 2009 24.7 -23.5 -103.6 -72.8
Includes the effects of exchange hedge operations
5.3) NET INCOME The Company posted 4Q10 net income of R$12.3 million, 19.9% down on 3Q10, with a net margin of 2.1%. Annual net income came to R$95.6 million, with a margin of 4.1%.
Net Income (R$ million) Booked Net Income (+) Investment Subsidy Booked as Deferred Revenue under Liabilities (-) Amortization of Deferred Revenue Adjusted Net Income NET MARGIN (%)
4Q09 57.4 7.0 (16.4) 47.9 7.8
3Q10 12.5 5.3 (2.5) 15.3 2.5
4Q10 19.1 1.2 (8.1) 12.3 2.1
% Chg. % Chg. 4Q10 x 4Q09 4Q10 x 3Q10 -66.8 -82.3 -50.9 -74.4 -5.7 p.p. 52.7 -76.7 224.9 -19.9 -0.4 p.p.
2009 128.0 23.5 (23.8) 127.7 5.9
2010 95.4 15.4 (15.3) 95.6 4.1
% Chg. 2010 x 2009 -25.5 -34.3 -35.8 -25.2 -1.8 p.p.
5.4) EBITDA EBITDA totaled R$1.0 million in 4Q10, 95.5% down on 3Q10, with an EBITDA margin of 0.2%, mainly impacted by the reduction price levels in the period, the booking of extraordinary costs and expenses related to the structural adjustments, and changes in provisioning levels. As mentioned previously, the Company has implemented measures to increase operational efficiency, which had an initial negative effect on costs and expenses, but which are already showing signs of generating improvements. EBITDA totaled R$143.0 million in 2010, with a margin of 6.1%, 2.0 p.p. down on the previous year.

Unadjusted Income Statement (R$ million) Net Revenue Net Income EBITDA 4Q10 590.7 12.9 1.2,327.6 89.2 136.7 4Q10 590.1 12.3 1.0
Adjusted 2010 2,334.0 95.6 143.0
6) CASH FLOW AND NET DEBT
Operating cash flow totaled R$46.9 million in 4Q10, reversing the negative R$7.8 million recorded in 4Q09, essentially due to higher receivables related to the Ministry of Education project, as well as the initiatives aimed at reducing inventories. In 2010, operating cash flow recorded outflow of R$157.6 million, impacted by the higher consumption of working capital mainly related to heavy deliveries to government clients in the period, whose payment reception periods are substantially longer than those in the retail market.
Synthetic cash flow (R$ million) Net Income in the Period (+) Depreciation and amortization Internal Cash Flow (+) Working capital (+) Other assets and liabilities Operating Cash Flow (+) Investments (+) Share buyback (+) Dividends Increase (Decrease) in Net Debt Net Cash (Debt) at the Beginning of the Period Net Cash (Debt) at the End of the Period - Advance of Receivables (according to IFRS 7) - Net Cash (Debt) at the End of the Period (according to IFRS 7)
4Q09 47.9 7.2 55.1 (47.4) (15.5) (7.8) (7.2) 0.0 (8.5) (23.5) (38.3) (61.8) (61.8)
3Q10 15.3 5.2 20.5 (11.6) 27.7 36.7 (12.0) 0.1 (25.0) (0.2) (140.9) (137.1) 127.4 (264.4)
4Q10 12.3 5.4 17.7 78.7 (49.5) 46.9 (16.0) 1.0 (25.0) 6.9 (137.1) (130.2) 185.2 (315.4)
2009 127.7 21.4 149.1 (47.5) (1.7) 99.9 (64.4) 0.0 (17.0) 18.5 19.1 (61.8) (61.8)
2010 95.6 20.9 116.5 (91.5) 2.5 27.6 (47.6) 1.7 (50.0) (68.4) (61.8) (130.2) 185.2 (315.4)
Cash and cash equivalents closed 4Q10 at R$89.8 million, R$37.0 million more than at the end of the previous quarter, chiefly due to the R$30.2 million upturn in gross debt, in turn caused by funding of R$32.0 million related to the third installment of the BNDES financing line, giving a total of R$100.0 million contracted from this institution at the end of the year. As a result, net debt amounted to R$130.2 million, 5.0% down on the end-of-3Q10 figure, with the long-term portion moving up by 27.5 p.p. to 76.8% of the total. Pursuant to IFRS 7, which regulates the disclosure of financial instruments, amounts related to adavances of receivables were added to the Companys debt. It is worth noting that these advances accompany the consumption of working capital resulting from the FNDE project open balances.

7) WORKING CAPITAL

The companys working capital, comprising inventories, accounts receivable and accounts payable (suppliers) closed 4Q10 at R$731.2 million, R$77.7 million down on the end-of-September balance, mainly due to the R$109.6 million reduction in inventories, thanks to the Companys stock-reduction efforts, and increased incomings, chiefly related to the strong deliveries to government clients during 2010. Also as part of its efforts to improve operating efficiency, the Company has been implementing measures to consistently reduce its inventories, such as rationalizing the PC portfolio in order to increase internal product line manufacturing scale, reducing the need for diversified component stocks and concentrating storage areas. On December 31, 2010, accounts receivable continued to be impacted by the high FNDE project amounts, which affected the Companys working capital throughout the year. Excluding this effect, the cash conversion cycle would have closed the fourth quarter at 101 days.

Working Capital WITHOUT Materials in Transit (R$ Million - end of period) Accounts Receivable (1) Inventories Suppliers Working Capital
Working Capital WITHOUT Materials in Transit (in days end of period) Accounts Receivable (1) Inventories Suppliers

(2) (2)

4Q09 410.0 580.0 (355.4) 634.5
1Q10 453.3 611.9 (259.7) 805.5
2Q10 533.3 602.6 (341.6) 794.3
3Q10 510.1 650.8 (352.0) 808.9
4Q10 439.9 541.2 (250.0) 731.2

4Q90 (41) 109

1Q133 (44) 166

2Q113 (56) 138

3Q102 (42) 134

4Q91 (36) 122

Average (44) 134

Cash Conversion Cycle

(1) In days of adjusted net revenue, excluding the amounts related to the prepayment of receivables (2) In days of COGS

8) CAPEX

Investments totaled R$12.6 million in 4Q10, most of which went to R&D activities in the Educational Technology segment, recognized under intangible assets, and improvements to the ERP system. As mentioned in section 5.2 Operating Expenses, as a result of accounting pronouncement CPC04, which regulates the recognition of intangible assets, a portion of R&D expenditure was recognized as an expense in the result, while disbursements for projects whose future profitability can be measured were booked under intangible assets.

Capex (R$ million)

24.7 3.3 5.5 13.6 2010R

R&D ERP Project

Others
Investments in 2011 are estimated at R$52.2 million. In the Others line in the chart above, part of the funds refers to changes to component and finished product storage in the Curitiba plant, new investments in the vertical integration of motherboard production and the joint-venture in Argentina (see below). The ERP project is expected to absorb R$3.3 million, including expansion and improvements. The portion of R&D investments eligible as intangible assets is expected to come to R$24.6 million in 2011, with the remainder being recognized as an expense in the income statement along the year. It is also worth noting that mandatory R&D investments are a result of the Basic Production Process (PPB) regulation and should total around 1.5% of gross revenue in 2011, including those recognized as an expense in the result plus those recognized under intangible assets.
Constitution of a joint venture in Argentina - Positivo Informtica and BGH On December 3, 2010, Positivo Informtica announced the beginning of its internationalization process through an alliance with BGH, an important player in the Argentine consumer goods segment. The Company acquired 50% of Informatica Fueguina S.A. (IFSA), the vehicle for the joint venture, whose purpose is to sell desktops, notebooks, all-in-ones, e-readers and tablets in Argentina and Uruguay. Management of the company will be shared between Positivo and BGH. BGH is a traditional home appliance and consumer electronics company with more than 90 years of experience in Argentina and which has been operating in Uruguay since 1997. Its main attributes include a deep knowledge of and a strong presence in the retail and government markets, as well as an efficient technical and customer support framework. Initially, IFSA plans to invest US$8 million in fixed assets to build an industrial plant in the Argentine province of Tierra del Fuego, Antarctica and South Atlantic Islands, with an initial production capacity of 40,000 PCs per month. Start-up is scheduled for 1H11 after completion of the legal formalities. The Argentine PC market is undergoing expansion and is currently one of the biggest in Latin America. The market in Argentina is expected to overcome 3.5 million units. The association should make the companies more competitive thanks to scale gains and a fresh infusion of knowledge, constituting a high-value strategic move for both firms.

10) RECONCILIATION OF THE FINANCIAL STATEMENTS IFRS
The purpose of this section is to show the main effects of the adoption of International Financial Reporting Standards (IFRS) on the Companys financial statements. There was no impact on the adjusted income statement, only on the balance sheet and statement of cash flow, as shown below. Effects on the Balance Sheet and Statement of Cash Flow: (i) Accounts Receivable (IFRS 7): this line included the amounts related to accounts receivable previously executed through assignment of credit agreements for the advance of receivables; Deferred Revenue (IAS 20): created as of the application of Law 11,638/07, this line refers to the retained portion of the investment subsidy, which will be recognized in the result as the
mandatory investments in R&D relative to said amount are amortized. As of the adoption of IFRS, these effects were also applied to periods prior to fiscal year 2008; (iii) Dividends Payable (IAS 10 and IAS 37): the amounts relative to the minimum mandatory dividends for the periods in question as determined by the Companys Bylaws, i.e. 25% of annual net income, were recognized under current liabilities; Loans and Financing (IFRS 7): as a corresponding entry to the accounts receivable effects, the amounts relative to the execution of trade notes through assignment of credit agreements for the advance of receivables were recognized in this line; Shareholders Equity: the IFRS adjustments to deferred revenue and dividends payable have a corresponding entry in the income reserve line under shareholders equity.
INCOME STATEMENT UNADJUSTED FOR IFRS (R$ thousand) GROSS REVENUE Sales of products Services 687,807 13,965 701,772 SALES DEDUCTIONS Returns and Trade Discounts Taxes and Contributions (4,513) (14,309) (14,566) (4,513) (157,633) (162,146) 614,155 (417,200) 196,955 (14,309) (138,777) (153,086) 621,155 (448,309) 172,846 (14,566) (145,785) (160,350) 590,070 (478,169) 111,901 687,422 14,490 701,913 663,935 14,984 678,920 687,807 13,965 701,772 687,422 14,490 701,913 663,935 14,984 678,920 4Q09 3Q10 4Q10 RECONCILIATION FOR IFRS 4Q09 3Q10 4Q10 ADJUSTED FOR IFRS 4Q09 3Q10 4Q10
(157,633) (138,777) (145,785) (162,146) (153,086) (160,350)
ADJUSTED NET SALES REVENUE COST OF GOODS SOLD AND SERVICES RENDERED GROSS PROFIT

614,155

621,155

590,070

(417,200) (448,309) (478,169) 196,955 172,846 111,901
OPERATING (EXPENSE) INCOME Selling Expenses General and Administrative Expenses Financial Income Financial Expenses Monetary and Foreign Exchange Variations Other net operating income (expenses) (111,561) (129,492) (26,817) 3,558 (25,176) 1,(26,310) 10,800 (14,378) 1,(90,834) (27,760) 8,042 (15,991) (576) 2,304 (111,561) (26,817) 3,558 (25,176) 1,(158,686) 38,269 (129,492) (26,310) 10,800 (14,378) 1,(157,740) 15,106 (90,834) (27,760) 8,042 (15,991) (576) 2,304 (124,815) (12,914)

(158,686) (157,740) (124,815) OPERATING INCOME 38,269 15,106 (12,914)
NON-OPERATING RESULTS NET INCOME BEFORE TAXES Provision for Income Taxes Provision for Social Contribution Deferred Income Taxes and Social Contribution NET INCOME EBITDA 38,269 7,947 2,921 (1,218) 47,919 66,037 15,106 1,(1,401) 15,293 22,536 (12,914) 24,673 12,250 1,019 38,269 7,947 2,921 (1,218) 47,919 66,037 15,106 1,(1,401) 15,293 22,536 (12,914) 24,673 12,250 1,019

Adjusted

INCOME STATEMENT UNADJUSTED FOR IFRS (R$ thousand) GROSS REVENUE Sales of products Services 2,462,029 51,081 2,513,110 SALES DEDUCTIONS Returns and Trade Discounts Taxes and Contributions (54,926) (531,648) (586,575) ADJUSTED NET SALES REVENUE COST OF GOODS SOLD AND SERVICES RENDERED GROSS PROFIT 2,180,003 (61,471) (554,966) (616,436) 2,333,999 (54,926) (531,648) (586,575) 2,180,003 (1,567,887) 612,116 (61,471) (554,966) (616,436) 2,333,999 (1,692,063) 641,935 2,619,939 52,917 2,672,856 2,462,029 51,081 2,513,110 2,619,939 52,917 2,672,2010 RECONCILIATION FOR IFRS ADJUSTED FOR IFRS 2009 2010
(1,567,887) (1,692,063) 612,116 641,935
OPERATING (EXPENSE) INCOME Selling Expenses General and Administrative Expenses Financial Income Financial Expenses Monetary and Foreign Exchange Variations Other net operating income (expenses) (381,754) (78,978) 23,458 (73,572) (43,599) 4,558 (549,887) OPERATING INCOME NON-OPERATING RESULTS 62,229 7,947 2,921 54,640 127,737 177,293 96,654 (11,769) (771) 11,476 95,590 143,047 62,229 7,947 2,921 54,640 127,737 177,293 96,654 (11,769) (771) 11,476 95,590 143,047 62,229 (412,263) (109,302) 29,250 (56,271) 1,575 1,730 (545,281) 96,654 (381,754) (78,978) 23,458 (73,572) (43,599) 4,558 (549,887) 62,229 (412,263) (109,302) 29,250 (56,271) 1,575 1,730 (545,281) 96,654
NET INCOME BEFORE TAXES Provision for Income Taxes Provision for Social Contribution Deferred Income Taxes and Social Contribution NET INCOME EBITDA
BALANCE SHEET UNADJUSTED FOR IFRS ASSETS (R$ thousand) CURRENT ASSETS
Cash and Cash Equivalents Receivables Inventories Receivable Taxes Advances Short term Deferred Taxes Other Credits 7,714 409,960 579,953 88,268 7,652 67,429 11,362 52,729 510,105 650,780 125,181 15,977 72,020 7,411 89,817 437,760 541,192 118,555 18,192 60,766 17,185 127,351 185,223 7,714 409,960 579,953 88,268 7,652 67,429 11,362 52,729 637,456 650,780 125,181 15,977 72,020 7,411 89,817 622,983 541,192 118,555 18,192 60,766 17,185
RECONCILIATION FOR IFRS 12/31/09 09/30/10 12/31/10
ADJUSTED FOR IFRS 12/31/09 09/30/10 12/31/10

12/31/09

09/30/10

12/31/10

Total Current Assets NON CURRENT ASSETS Long term Assets Related Parties Deferred Taxes Other Credits Investments Net Property, Plant & Equipment Net Intangible Assets Total Noncurrent Assets TOTAL ASSETS

1,172,338

1,434,203

1,283,467

127,351

185,223

1,561,554

1,468,690

60,509 15,346 45,163 1,641 45,716 67,736 175,602 1,347,941
31, 421 20,750 10,671 1,514 57,228 70,375 160,538 1,594,741
26,362 16,427 9,935 4,660 58,648 71,309 160,979 1,444,446
31, 421 20,750 10,671 1,514 57,228 70,375 160,538 1,722,092
26,362 16,427 9,935 4,660 58,648 71,309 160,979 1,629,669
BALANCE SHEET UNADJUSTED FOR IFRS LIABILITIES (R$ thousand) CURRENT LIABILITIES Loans and Financing Suppliers Accrued Payroll Provisions Taxes Payables Dividends Payable Deferred Taxes Deferred Revenue Other Payables Advances from Clients Loans and Financing Total Current Liabilities NON CURRENT LIABILITIES Long term Liabilities Loans and Financing Related Parties Provisions Provisions for Contingencies Long term Deferred Taxes Other Payables Total Noncurrent Liabilities Capital Capital Reserve Income Reserve Treasury Shares Total Shareholders Equity TOTAL LIABILITIES
40,320 29,574 4,863 4,283 1,600 40,320 389,000 121,773 151,758 (38,126) 624,405 1,347,941 120,292 68,000 34,251 13,138 4,903 120,292 389,000 121,165 223,264 (36,473) 696,956 1,594,741 155,325 100,000 34,251 15,512 5,562 155,325 389,000 121,122 212,443 (36,255) 686,310 1,444,446 14,109 14,109 (1,383) (1,383) 127,351 185,223 40,320 29,574 4,863 4,283 1,600 40,320 389,000 121,773 165,868 (38,126) 638,514 120,292 68,000 34,251 13,138 4,903 120,292 389,000 121,165 221,881 (36,473) 695,573 155,325 100,000 34,251 15,512 5,562 155,325 389,000 121,122 212,443 (36,255) 686,310 1,629,669 69,529 355,366 22,226 133,226 4,441 2,343 50,000 12,177 20,045 11,022 2,841 683,216 121,787 352,012 36,832 152,060 3,664 25,001 46,185 31,878 7,777,493 119,997 249,953 26,073 137,287 4,385 22,299 5,275 32,651 4,602,811 (20,321) 6,212 (14,109) 127,351 1,383 128,734 185,223 185,223 69,529 355,366 22,226 133,226 4,441 2,343 29,679 12,177 26,257 11,022 2,841 669,107 249,138 352,012 36,832 152,060 3,664 25,001 46,185 33,261 7,906,227 305,220 249,953 26,073 137,287 4,385 22,299 5,275 32,651 4,788,034

1,347,941 1,722,092

STATEMENTS OF CASH FLOWS UNADJUSTED FOR IFRS (R$ thousand) Net income Reconciliation of net income to net cash provided by operating activities: Depreciation and Amortization Provision for labor, tax and civil risks Provision for doubtful debts Provision for obsolete inventory Stock Options Disposal of property and equipment Write-off of R&D investment Deferred income and social contribution taxes 7,172 2,16,584 1,324 (20,612) 12,312 1,216 5,408 5,913 (85) (5,923) (868) 3,(24,674) 7,172 2,16,584 1,324 (20,612) 12,312 1,216 5,408 5,913 (85) (5,923) (868) 3,(24,674) 4Q09 47,919 4Q10 12,250 RECONCILIATION FOR IFRS 4Q09 4Q10 ADJUSTED FOR IFRS 4Q09 47,919 4Q10 12,250

23,591 (171,819) 13,814 (3,182) (37,010)
(29,227) 48,567 (30,287) (10,541) 28,530

(185,223) -

(214,450) 48,567 (30,287) (10,541) 28,530
53,265 73,433 (18,650) (4,700)
(105,413) 643 (2,400) (10,499)
53,265 73,433 (18,650) (4,700) 99,886
(105,413) 643 (2,400) (10,499) (157,643)
CASH FLOW FROM INVESTING ACTIVITIES Increase in investments Purchases of property, plant and equipment Increase in intangible assets Net cash provided by (used in) investing activities
(625) (10,196) (53,584) (64,404)
(3,920) (22,299) (21,413) (47,633)
CASH FLOW FROM FINANCING ACTIVITIES Payments of dividends and interest on capital Borrow ings (repaid), net Treasury shares Net cash provided by (used in) financing activities
(17,000) (29,828) (46,828)
(50,000) 150,468 1,686 287,378

185,223 -

(50,000) 335,691 1,686 287,378
(11,346) 19,060 7,714 127,737
82,103 7,714 89,817 95,591
Some of the information contain herein is based on hypotheses and current perspectives of the management of the Company which could cause material variations in results, performance and future events. The real results, performance and events could differ significantly from those expressed or implied in these claims as a result of diverse factors, such as general economic conditions in Brazil and other countries, levels of tax and exchange rates, changes in laws and regulations, and general competitive factors (whether global, regional, or national).

IR Contacts

Ariel Leonardo Szwarc CFO and Head of Investor Relations Lincon Lopes Ferraz IR Manager Email: ir@positivo.com.br Phone: (55 41) 3316-7887 / 3341-6440 IR Website: www.positivoinformatica.com.br/ir

4Q10 Conference Call

Wednesday, March 2, 2011. > Ingls 11:30 a.m. (Braslia) 09:30 a.m. (New York) Calls originating in the United States: 1 (877) 317-6776 Calls originating in other countries: 1 (412) 317-6776 Code: Positivo > Portuguese 10:30 a.m. (Braslia) 08:30 a.m. (New York) Calls originating in Brazil: (11) 3127-4971 Calls originating abroad: +55 (11) 3127-4971- Press *0 (star zero) to talk to the operators Code: Positivo Informtica
Sobre a Positivo Informtica: Founded in 1989, Positivo Informtica (BM&FBovespa:POSI3) has a national and international presence, offering the most advanced technology solutions, from the production of computers to the development of educational tools. The Company operates through two business divisions: Hardware and Educational Technology. The Hardware Division portfolio offers a complete line of personal computers (desktops and notebooks) and servers, and has led the domestic PC market for more than six consecutive years according to IDC. In order to provide support for all of its activities, it maintains a technical support network comprising nearly 400 licensed companies, covering every Brazilian city, as well as the CRP (Positivo Relationship Center). In the Educational Technology segment, Positivo Informtica is renowned for being at the forefront of development and for the high quality of its technological solutions in the three segments in which it operates: private schools, public schools and retail. Positivo Informticas educational solutions are present in 8,118 public schools, 2,325 private schools and more than 900 retail points of sale. Positivo Informtica on the Internet: www.positivoinformatica.com.br/ir.